Are single-sourcing policies still sustainable?

In August a relatively little-known Slovenian supplier of gear rings, KLS Ljubno, was flooded and stopped production. Within a few days, several Volkswagen factories also ground to a halt as stocks of gear rings were exhausted. Worst hit was the T-Roc plant in Portugal which will be closed for nine weeks between 11 September and 12 November. Around 40-45,000 units of one of Volkswagen’s top selling models in Europe will be not be built. Production will also stop for shorter periods in Wolfsburg (hitting Golf and Tiguan output) and at Hanover where Volkswagen makes the Transporter.

LJS’ rings are used in certain Volkswagen engines for which LJS is understood to be the sole supplier; although Volkswagen uses other suppliers for equivalent parts in other engines, switching suppliers is not a straightforward process. It is not known which other vehicle companies might also be affected by LJS’ temporary closure, with one insider suggesting that Fiat plants might also be impacted.