At a factory in Ukraine owned by a German auto parts supplier, mothers are known to flee for the border with children in hand. Men leave their stations to fight on the front. And on a daily basis, the workers who remain dash back and forth to an air raid bunker for protection.
It’s rare for a CEO to speak publicly about the effect of the war on his workforce. Yet that’s exactly what Aldo Kamper, chief of Leoni, did this week, explaining how operations at his two wiring harness plants in the somewhat safer western Ukraine continued amid the ongoing violence that has decimated cities like Kharkiv and Mariupol on the other side of the country.
“We’ve seen shelling and rockets impacting not far away, thank goodness neither of our sites have been directly affected,” Kamper told reporters on Wednesday. “And when missiles are launched—from Belarus, for example—no one in west Ukraine knows where they will land.”
To protect his workforce, the company hastily coordinated with local authorities to use of bomb shelters near the company’s two factories in Stryi and Kolomyia. Before the war broke out, some 7,000 workers, mostly women, would come to work there every day.
“We furnished the shelters as best we could and practiced quickly evacuating when the alarm is sounded. Unfortunately, after so many weeks of fighting, this has now become routine,” Kamper explained. “Sticking it out there in these air raid bunkers in temperatures barely above freezing, not knowing how long it will last, only to then return to the job — it commands our greatest admiration and respect.”
Curfews and constant stress
Since the bombing doesn’t end at dusk but rather continues at night when many of its workers are back home, Kamper says it’s common for staff get little sleep. So output the following morning is cut to ensure people can recover somewhat from the constant stress of war.
In fact, showing up at all is entirely voluntary given the circumstances, according to the CEO.
“If they cannot or do not want to come to work, they get their wages anyway, but the willingness to do so is considerable,” Kamper explained. “They see it in a sense as their contribution to the country’s war effort, that by working whenever possible they show they’re a reliable link in the automotive supply chain, ensuring Ukraine has a future.”
At the start of the war a month ago, production had to cease entirely, in part because closed borders created long traffic jams that choked off the supply of raw materials imported from abroad. As of this week, however, his two plants are nominally back to two-shift operation and have been given permission to run in the evening despite curfews.
Roughly a tenth of Leoni’s European wiring harness production is in western Ukraine, and output is currently at about 60% to 70% of pre-war production volume. While Kamper, a Dutch national, said that most staff continue working, some are no longer around.
“Of the men, a number are reservists that haven’t yet been called up for duty, but a few hundred have volunteered anyway. They left to fight on the eastern front, while another few hundred women have taken their children and fled, for example to Romania,” he said.
Third crisis in two years
Over a combined surface area of 70,000 square meters (17.3 acres) between both plants, workers assemble wiring harnesses, the circulatory and nervous system of a car that distribute data and provide electricity to the dozens of embedded controls units. Typically, it’s the first major component to be installed once welding robots have completed work on a car’s steel body.
Comprised typically of more than a mile of wiring, these are not bought off the shelf but rather tailored made for specific cars. When a customer configures a new vehicle online, pretty much every added option selected affects what kind of cables are needed.
As a result, wiring harnesses must be delivered to an automaker just when they are needed and in the precise sequence of the cars running off the assembly line. They cannot simply be sourced from any old factory halfway around the world.
“Wiring harnesses are our biggest supply bottleneck right now,” said Volkswagen Group CEO Herbert Diess during last week’s annual press conference.
Production of these vital components must be situated close enough to a car factory to ensure the supply chain doesn’t break, and yet be located in a low-wage country due to their high level of man hours needed to construct each wiring harness. “That is why most are produced in Eastern Europe and North Africa,” Diess explained.
VW has had to shift the production of 50,000 to 100,000 cars from Germany to the Americas or Asia as a result of the war-related shortage in wiring harnesses. This week, Mercedes-Benz was forced to apply for government assistance for workers in its domestic plant in Sindelfingen, where they can no longer build as many luxury S-Class limousines as planned because of missing parts from Ukraine.
In the meantime, Leoni is trying to find ad hoc solutions. At considerable cost, extra capacity is now being ramped up across its other European sites in Romania, Serbia, and Slovakia as well as Tunisia, Morocco, and Egypt in North Africa.
For Leoni, the war is the third crisis over the past two years, starting with the pandemic, and followed by the semiconductor shortage that crippled passenger car production. Russia’s invasion means the company has now had to cut its financial guidance for 2022, a small price to pay in view of the obvious dangers facing its staff.
“We’ve always known we’ve had great employees naturally, but the level of commitment and motivation that our Ukrainian employees demonstrate is simply superb and worthy of admiration,” Kamper said. “It’s inspiring to see how our workers defend their country and their way of life: in short Leoni stands with Ukraine.”
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