Indeed Tesla only achieved its closed loop earlier this year because local officials helped coordinate with more than 100 suppliers, according to a person familiar with the situation. Provincial governments can vary in their power and heft, and Shanghai has been a consistent Tesla backer.
Conditions under a closed loop at the Chinese factory complex of Apple Inc.’s main global production partner recently seeded unrest that saw a mass exodus of employees and a violent clash with security guards. The situation at the factory — known as iPhone City for its massive scale — has laid bare how inviable closed loops are long term, further testing China’s already frayed COVID Zero strategy.
Mounting dissatisfaction among Foxconn Technology Group’s ranks now threatens to further disrupt production at the Zhengzhou plant that cranks out the majority of Apple’s iPhones for shipment around the world.
More broadly, public anger over China’s zero-tolerance approach to COVID is rising, with extraordinary street protests over the weekend. That may make companies even less willing to keep employees effectively locked up in factories for extended periods.
Honda Motor Co. also suspended its operations in Wuhan, the original virus epicenter, because of limitations around movement introduced in the area. Whether the plant will remain closed through Wednesday hasn’t been decided, a spokesperson said Tuesday. Honda also extended the suspension of operations at another plant producing engines for lawn mowers in Chongqing, southwest China.
Motorcycle maker Yamaha Motor Co. is partially halting production at its motorcycle plant in Chongqing, where 8,721 new COVID cases were reported Nov. 28, making it one of China’s biggest outbreaks. Other Japanese carmakers including Nissan Motor Co., Mazda Motor Corp. and Mitsubishi Motors Corp. told Bloomberg News their China operations haven’t been impacted yet.
Toyota Motor Corp., the world’s No. 1 carmaker, is adjusting production at some Chinese factories due to multiple factors, said spokeswoman Shino Yamada, declining to elaborate.
Contemporary Amperex Technology Co., the world’s biggest maker of batteries for electric cars, said its plants are operating as normal in China so far.
Closed-loop systems typically require workers to travel from on-site accommodation to a factory and back, strictly avoiding contact with outsiders. VW used such a system earlier this year with mixed success. After locking workers in and then finding the supply of required auto parts also disrupted, VW resorted to scheduled group activities like voluntary garbage collecting and movie nights to keep people occupied.