The South China Morning Post (SCMP) reported on April 19 that Shanghai is allowing certain firms to resume their plants and operations. It is a bid to stabilize the supply chains which are being threatened by the city’s prolonged lockdown.
The city is designating a “white list” of 666 businesses that are deemed vitally crucial for the economy and society. The firms are from key industries such as integrated circuits, automobile manufacturing, equipment manufacturing, and biomedicine.
According to Reuters, the list names Tesla, Volkswagen, SAIC Motor, and Semiconductor Manufacturing International Corporation (SMIC).
By allowing major producers to operate again, Shanghai officials said it is trying to mitigate the impact of the lockdown restrictions on supply chains.
As SMCP reported, the selected companies still have to limit contact with outsiders and reduce transmission hazards as they resume operations. Companies will have to run at a lower capacity and ask key employees to reside on-site.
There are other issues that need to be resolved before enterprises can re-operate.
An executive told state-backed Shanghai Securities News that since community lockdown still remains, he is unsure how to move items, return orders, or collect invoices upon resuming work.
He added that these are practical problems that the policy needs to address.
Ming-Chi Kuo, a TF International Securities analyst, tweeted on April 17 that Tesla would have to cut its two-shift operation to only one shift. It would lower production to 25,000-30,000 shipment units per month.
According to Kuo, Tesla’s normal production capacity is unlikely to resume until mid-May.
SAIC Motor says it has begun stress testing its own manufacturing restoration plans on April 18. Volkswagen says it is looking into the possibility of restarting production at its SAIC joint venture.