Risk Center

Auto industry reeling after Slovenia floods

Ulf Venne

The recent flooding is the worst natural disaster to ever hit Slovenia, for both the loss of human life and its impact on the country’s well-developed automotive industry. Every single European car has at least one part that comes from Slovenia, and more than 1000 companies in Slovenia are heavily affected by this flooding.  

Everstream’s Intelligence Solutions team immediately identified several key players in the flood-affected area and notified our affected clients. Among the major operations:  

  • Odelo, a Tier-1 supplier for lighting in cars, has two plants in the region 
  • Starkom, a company belonging to Mercedes, provides chassis 
  • Akrapovic is an exhaust system supplier for racing cars 

Our analyst team was able to confirm the extent of some of the damage and relay that information quickly to affected companies. Details include:  

  • The factory of KLS Ljubno a company supplying shaft rings and starter ring gears for the automotive components sector is completely destroyed. This Tier 2 supplier has a workforce of 250 employees and will take months to be in operation again. 
  • TAB Tovarna akumulatorskih baterij d.d. halted production and will need 10 weeks to gradually restart production. This battery supplier’s customers include VW, Volvo, Daimler, ZF and Airbus. 
  • The chemicals company Cinkarna, an automotive industry supplier, sustained damages worth over 500,000 Euro. 

The bad news 

This flooding could not have come at a worse time. Most automotive OEMs and some of the Tier 1 automotive companies are in summer vacation mode. Although news outlets are reporting that this is good news because factories weren’t running, it’s actually bad news for supply chains because it will leave many managers in the dark.  

While some Slovenian factories have already resumed productions, others are still in planned shutdowns of up to three weeks. It is very likely that their supplier managers responsible for customer relationships are on vacation, and until they return their customers will struggle to verify the extent of damage. That will delay the start to trigger remedial action, so we might see more surprises popping up in the next couple of weeks. 

The good news 

The current extent of the damage is a big issue, but it’s solvable for companies that have full information now, and can pivot quickly to alternate plans. For example, if the important parts of the manufacturing tools are salvageable, shafts and starter rings can be produced somewhere else – maybe even by a customer – with very little prep work. This can give suppliers in Slovenia valuable time to rebuild.  

For batteries, alternatives are available, but supply capacity (and with it, price) can be an issue. Finding alternate suppliers and getting to them early will be critical to maintaining operations. 

As with any industry disruption, responding quickly is critical. Supply chain managers who can respond best will be those who had early warning and full knowledge of what level of risk the threat poses to their specific operation.  

Learn more about scoring supplier risk in our white paper on supplier management 

Ulf Venne leads the global Center of Excellence for Everstream Analytics. For over 10 years he has helped companies improve supply chain risk management, publishing articles and white papers on tools and methodologies for supply chain resilience, agility, and sustainability. 

Share this post