News Roundup: Automotive Safety Scandals & Global Supply Chain Challenges Unveiled

How safe is your car? This week on the Chain Reaction Podcast, we promise to uncover the facts behind major global supply chain disruptions starting with a deep dive into the automotive sector. Join us as we scrutinize Stellantis' latest airbag recall affecting popular models like the Citroen C4 and Opel, putting 29,000 vehicles under the spotlight. We’ll also navigate through the murky waters of Japan's automotive scandal, where giants like Toyota and Mazda stand accused of falsifying safety and emission tests. To top it off, we'll break down Nvidia's astounding rise to a three trillion valuation, surpassing even Apple as the world's second-largest business — a milestone propelled by the soaring demand for their cutting-edge chips.

Our investigation doesn’t stop there. We turn our attention to the critical supply chain challenges faced by various sectors worldwide. From the alarming shortage of essential medicines in UK pharmacies to a recent Boeing 777 engine emergency, we'll cover it all. We'll also discuss the soaring global commodity prices affecting food supplies, a controversial call by US lawmakers to ban Chinese battery manufacturer CATL over forced labor allegations, and the dire importance of Good Manufacturing Practices (GMP) as illustrated by cases involving pharmaceutical giants like GlaxoSmithKline. Engage with us for a comprehensive examination of the complexities and challenges that are reshaping global supply chains today.

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Transcript

Tony Hines: 0:05

Hello, tony Hines. Here You're listening to the Chain Reaction Podcast, all about supply chain advantage, and this is the news roundup all things impacting global supply chains. This week it's the business edition, so if you want to keep your finger on the pulse, this is the one for you. Well, stellantis announced this week that they're making a recall of some of the vehicles, and this is because of the airbag problem that's been plaguing them for some time. They've already made recalls on some of the cars in the past, but here we are again at yet another recall. The Citroen C4, ds4 and DS5 models, as well as the Opel models, are now also part of the preventative recall measures, which is less restrictive than the previous recalls on the Citroen C3 and the DS3 models, which requires the immobilisation on the vehicles concerned to be examined and perhaps replaced.

Tony Hines: 1:06

29,000 Opel vehicles are fitted with the Takata airbags, which are affected. The airbags are said to be a safety risk when deployed because the chemicals they contain can deteriorate when exposed to hot and humid weather conditions. Well, that could be anywhere, couldn't it these days, with climate change? And the C4, ds4 and DS5 vehicles are based on different platforms, using different airbag references, for which there haven't been any failures identified. As Stellantis commentator said, opel vehicles are fitted with different airbags and, again, no failures have yet been identified. There have been more than 30 deaths, including 27 in the United States, and more than 400 injuries attributed to airbags fitted to vehicles of various makers. The inflation of defective equipment may also cause metal debris to be projected and cause serious injuries. So they seem to be having some serious trouble with airbags generally, and obviously they deteriorate with weather conditions.

Tony Hines: 2:12

Now the other thing that's far more serious is there are some car makers in Japan, including Toyota, where they've been manipulating the certification details to get their cars through the tests applied to impact damage. So, for example, it was noted that on the Daihatsu models that are made by Toyota, they only measured impact on one side of the car, when they're supposed to actually measure the impact on both sides of the car. And so if that's happening, not just in this example here, but in other plants, where people are knowingly manipulating data to actually give a better impression of the car's ability to deal with collisions better than they really would, well that's seriously bad. Akio Toyoda, the chairman of Toyota Motor Manufacturing, was seriously apologetic to customers and car enthusiasts in his statement this week about these troubles and a full investigation is taking place to see what's actually happened. But it looks like work is at some of the plants not just in Toyota, but it's happened at Mazda too, where they are manipulating data on fuel emissions and the pollution aspects of the vehicles, and so this appears to be happening in lots of different places. And obviously, if the workforce goes rogue and they decide that they're going to take it on themselves to make the certificates look better, or the to make the certificates look better or the results for the certificates look better than they actually are by not fixing a problem but manipulating data, then that's a criminal act, isn't it? So all's not well in the Japanese automakers just at the moment and, of course, if it's happening in Japan, it could be happening elsewhere in the world, and we had the biggest scandal when VW came out with its results saying they'd been manipulated a few years back, and it did a lot of damage to the brand. So we'll have to see what's next.

Tony Hines: 4:19

The problems in vehicle manufacturing with regard to the manipulation of test data on airbags, crash tests and emission tests to achieve certification standards are significant and multifaceted, and here's a summary of the issues that are happening currently Safety testing errors. Several auto manufacturers in Japan, including Toyota, honda, Mazda and Yamaha, have admitted errors in safety testing. That's spanned a decade, so it's not just now, it's over the last decade and this involved the use of inadequate or outdated data in collision tests, incorrect testing of airbag, inflation and rare seat damaging crashes. There's also been falsification of data Engine power tests were found to have been falsified, and pedestrian and occupant safety data were manipulated. This has led to the suspension of production and exports for several models made by these companies. Emission test manipulation investigators are currently continuing into emissions and fuel efficiency testing at Toyota, with concerns that these may also have been manipulated to meet the standards for certification.

Tony Hines: 5:27

Impact on consumers is that the wrongdoing does not affect the safety of the vehicles already on the roads, which include popular models like the Corolla and the Lexus luxury vehicles, but that the companies have had to halt shipments of some vehicles as a result of the findings, so that will make a shortage of supply on some of the models. The regulatory response by the Japanese government has forced the companies to halt shipments of some vehicles, and shareholder pressure is mounting for accountability and transparency the legal and the ethical implications of all of this, there are discussions all over social media, on platforms like Reddit, that suggest there should be more than just fines. There is a call for personal accountability, including potential jail time for those responsible for breaking laws. So, like I said earlier, it's a criminal act and consumer trust has just been flattened. These scandals have had a significant impact on consumer trust and the reputation of the companies involved. It raises concerns about the reliability of the safety features and the environmental impact of the vehicles produced. So, in conclusion, the manipulation of test data in vehicle manufacturing to get these standards through for certification have serious ethical, legal and safety concerns. It undermines the integrity of the automotive industry. It's got far-reaching consequences for consumers and the environment and, of course, when this kind of thing goes on, there could be fatalities. Nvidia hit the three trillion mark in valuation this week and it's overtaken Apple as the second largest business in the world. And that's all because the chips are going up and up and up and the demand for chips is going up and up and up. It won't be long before they're number one. So Microsoft better watch out Now.

Tony Hines: 7:26

You'll have heard me speaking on the Chain Reaction podcast in the past few weeks about medicine shortages in the United Kingdom, and this is all down to various supply chain problems that have occurred over the past few years. In the past two years, shortages have more than tripled. The government has been forced to intervene in the United Kingdom 50 times to authorise emergency use of alternative drugs for patients. This is via something which is called the Serious Shortage Protocols, the SSP, and it relates to acute medicine shortages. Experts say it's just the tip of the iceberg when it comes to supply chain problems with medicines and all sorts of problems facing pharmacists, of course, as well, and it's a threat to patient health. Pharmacists have reported that they've had to turn away many people in need of medication. The National Pharmacy Association wants the political parties in the UK to commit to tackling the alarming growth in supply chain. Issues related to pharmaceutical supplies and drugs for a wide range of conditions have been the subject of these SSPs, and they include things like epilepsy, menopause, depression, angina, thyroid problems, whooping, cough, anaphylaxis. And the concern is that the MPA found that the number of SSPs issued in the UK is now three and a half times higher than it was in previous years 50 SSPs went out between 2022 and 2024, compared to just 15 between 2019 and 2021. So this is a supply chain in need of urgent attention.

Tony Hines: 9:10

The increase in serious shortage protocols in UK pharmacies is a major concern. Pharmacies already face a number of challenges. They spend hours every day trying to secure stock and often have to turn patients away due to the inability to order vital medical supplies. The UK's supply chain structure is grossly underfunded compared to other Western nations. Changes in global demand, price fluctuations, manufacturing issues and exchange rate fluctuations have all contributed to shortages in the supply of medicines. The current funding crisis, with support for pharmacies falling by 40% over the last decade in real terms, exasperates the problem and the impact on patients. Well, it seriously affects their lives and, of course, it could lead to premature deaths in some cases. So whoever comes into government in the UK has an immediate challenge to face in the pharmaceutical sector.

Tony Hines: 10:11

There's hardly a week goes by without Boeing being in the news, and this week it was fire on board a Canada Airways plane that was forced to return to Toronto Yet another disastrous issue for the Boeing 777 that that turned out to be an emergency landing after flames erupted in an engine. There were videos on social media showing the flames coming out of the plane and apparently the controller in the tower said there's a lot of flames coming out of the plane. And apparently the controller in the tower said there's a lot of flames coming out of that engine, you've got a lot of fire. So another week, another plane Quality still a problem at Boeing, it would appear. Now commodity prices still keep rising and, according to the United Nations Food and Agriculture Organisation, the price index that they have, which tracks globally traded food commodities, has risen by 0.9% from its April level. Cereal prices have risen by 6.3% because of poor yields. So food prices still going up around the globe. A group of Republican lawmakers in the United States are asking for a complete ban on CATL. C-a-t-l, which is the battery manufacturer in China. They want to see a complete ban on their products with immediate effect. This is part of the continuing move against Chinese products and this is because of the use of Uyghur forced labour. It's under the Uyghur Forced Labour Prevention Act that they want them to be banned. They want it on the import ban list. Cattle and Goshen they'd like to see pushed out, and they have ties with Ford and Volkswagen. The Volkswagen Group in China said it has no evidence of human rights violations in connection with its business activities in China and they'll be investigating the allegations as they have done in the past. A spokesperson told Reuters this week. Volkswagen Investments in China also holds a 26% interest in Goshen and Goshen is not nominated for any US projects or import businesses into the country. Cattle also denied that the allegations were groundless and completely false. The Beijing government has denied any abuses, which the US government has said is characterized by ongoing genocide of minorities in the Xinjiang region.

Tony Hines: 12:38

Good manufacturing processes GMPs are a system of processes, procedures and documentation to ensure products such as food, cosmetics and pharmaceutical goods are consistently produced and controlled according to quality standards. The main goal of GMP is to prevent harm to the end user, which includes ensuring products are free from contamination, they're consistent in the manufacture and have been well documented that's for traceability and the like. Now, the five main components of GMP are often referred to as the five Ps. It's another one of those I know, so people ensuring all employees keep to the manufacturing processes and follow the regulations. Number two products undergoing constant testing and quality assurance before distribution. Thirdly, processes being properly documented, clear, consistent and distributed to all employees properly documented, clear, consistent and distributed to all employees. And four premises are maintained in clean and hygienic manufacturing areas and five procedures establishing strong quality management systems.

Tony Hines: 13:51

The penalties for non-compliance with GMP can lead to serious cost. They include recalls, seizures, fines and even jail time. In the case of criminal activity, where non-compliance has resulted in serious public harm, a criminal prosecution may occur. Companies have faced significant financial penalties, such as GlaxoSmithKline, which paid US$3 billion to settle a healthcare fraud case related to GMP violations. These penalties emphasise the importance of keeping to GMP to ensure the safety and quality of manufactured products.

Tony Hines: 14:30

If we look at some of the GMP violations, it might be for not following a proper manufacturing procedure, frequent issue that can arise for various reasons because of complexities or misunderstanding of processes. Not following quality control protocols and failing to keep to the protocols can lead to significant issues. Falsifying data, intentionally altering or fabricating data to meet GMP standards is a serious violation. Now we mentioned that in the car industry on the particular tests and so on earlier on about the falsification of data, but here we've got falsification of data in the manufacturing process. Failing to maintain accurate records for traceability and accountability of the manufacturing and failing to properly train employees is another important issue for GMP regulations. And, of course, following safety procedures that ensure accidents are prevented and contamination possibilities are eliminated, and there are particular guidelines for pharma companies as well. In this particular process or set of processes, the GMPs.

Tony Hines: 15:40

Apotex was a pharmaceutical company that faced penalties for GMP violations in 2009, where the FDA in the US sent a warning letter. Apotex was cited for issues of its manufacturing facility at Better Chokey, ontario, canada. The violations came to light after a bacteriological contamination incident and the company was found to have not submitted the required NDA field alert report. Another example was Avanos Medical, which agreed to pay £22.2 million as part of a deferred prosecution agreement to resolve one felony count of introducing misbranded devices into interstate commerce with the intent to defraud and mislead. They admitted selling hundreds of thousands of misbranded surgical gowns that failed to meet quality standards, and these are just a small number of examples where GMP violations have happened. So GMP is very important.

Tony Hines: 16:40

The United States and the European Union both have GMP requirements. In the US, they're detailed under Title 21 of the Code of Federal Regulation, the CFR, which is legal and binding and enforced by the FDA, the Food and Drug Administration. In the European Union, gmp requirements are part of regulations, directives and guides, such as EUDRAX, volume 4, which governs medicine products, and they bind every member state and it's enforced by the European Medicines Agency, the EMA, and National Competent Authorities, nca. Both US and EU GMP regulations want to ensure that products are consistently produced and controlled according to quality standards. While they are similar, it's also important to understand that there are differences in the regulatory frameworks, inspection approaches and specific requirements. So if you're doing trade either in the EU or the US, you have to get to grips with GMP.

Tony Hines: 17:41

The EU has a more risk-based approach, where manufacturers are expected to identify and control potential risks through the production process. The US has a more prescriptive approach, with requirements detailing each step in a process. Fda inspections are far more unpredictable and may focus on any aspect of GMP regulations. Eu inspections tend to be more standardised and may focus on risk management systems in place. The requirements of documentation are different between the US and the EU. Also, in the EU, gmps require that quality control laboratories are independent from the production areas. Us GMPs allow for quality control laboratories to be located within a production facility. So this is to do with trying to keep things independent.

Tony Hines: 18:28

So, to sum up, it's about ensuring consistent quality, managing risk things that could disrupt the supply chain, managing risk things that could disrupt the supply chain. Reducing shortages caused by quality issues or non-compliance in the manufacturing standards. Building trust with regulators, healthcare providers and patients to ensure the smooth supply chain operations. Allowing and facilitating global trade. Building harmonization of standards across the world and creating more stable supply chains. And prompting proactive measures that encourage companies to adopt best practice, as well as improving efficiencies in operations and standardizing processes. Reducing waste, which can lead into more reliable supply of medicines. And, of course, enhancing safety, reducing contamination or defects in the medicine production processes, so very important to public health and the pharmaceutical industry's success Keeps the supply chain safe, efficient and reliable.

Tony Hines: 19:45

The departing Boeing CEO, dave Calhoun, will face a Senate Permanent Subcommittee on investigations on June 18th, so we'll be watching that with interest to see what happens. You'll face questions about the whistleblowers, the safety allegations and the quality controls at Boeing Aircraft. And the quality controls at Boeing Aircraft. Recently, a company engineer alleged the assembly of Boeing 787 Dreamliners put excessive stress on planes and reduced their lifespans. Boeing says it's inaccurate. So are they employing engineers that don't know what they're talking about? Well, we'll have to wait and see, won't we? No doubt we'll be reporting it here after the Senate hearing on June 18th.

Tony Hines: 20:14

Now there's something of a capacity issue arising with global trade, just as the peak shipping season is beginning. Spot rates on freight are up by 30% in the past few weeks and they're going higher. There's bad weather, longer times spent at sea and vessels skipping ports are adding to supply chain problems. The spike is likely to increase throughout June and the dramatic rise in prices could see it exceed the disruption caused by the Red Sea spike. And of course, we know what that means for consumers rising prices in the stores, the longer transits are to avoid the Red Sea area, of course, and that's adding time to shipping. There's bad weather in Asia that hit the flow of traffic on trade routes and it's caused carriers to start skipping ports to decrease time at ports and, of course, not picking up and returning empty containers, all in a push to keep to time. If we look at the short and long-term rates, they've risen steadily since April this year. When they were at the lowest, the spot rates were just over $4,000 to our East Coast port and to West Coast ports about $3,200, $3,300. So the East Coast ports just over $4,000 back in April and about $3,300 to West Coast ports at that time. And if we look at the longer term rates, they're going up too. They're already over $3,000 to the East Coast and close to $2,000 to the West Coast. That's for a 40 foot equivalent unit from East Asia to the US. Dhl has been telling us there's going to be a container crunch since January because of the longer time at sea, but it's slowed by bad weather in China, malaysia and Singapore.

Tony Hines: 22:06

Now here's a roundup of several notable developments during this week at container ports globally. The Container Ports Performance Index, the CPPI, was published 2023, and it revealed that East and Southeast Asian ports continue to excel, despite regional disruptions affecting global maritime operations. The port of Singapore, the world's largest transshipment hub, is reactivating older berths to increase capacity and combat congestion. Congestion at Singapore's port has spiked, becoming a new choke point in global supply chains. This has led carriers to extend charter agreements and expand container fleets in anticipation of a prolonged peak season. Container freight rates are expected to continue rising in June due to fears over shortages of capacity, with rates reaching levels previously seen during the pandemic, and the port of Baltimore is nearing normal operations following the Key Bridge collapse two months ago, so that's a piece of good news. China's Yangshan port and Oman's port of Salalah topped the Container Port Efficiency Index, with Malaysia's port of Tanjung Palapas entering the top five.

Tony Hines: 23:17

So those are all the things that are happening in global trade around the world in the past week. So a positive note on which to end today's news roundup. In the markets this week, brent Oil closed the week at $79.56. So down. Well, that's a roundup of all the things impacting global supply chains in this week that we've pulled together so that you can catch up on some of the big business impacts happening around the globe. And, don't forget, you can catch up on detailed episodes where we discuss particular topics of importance to anyone interested in supply chains and business. So drop by and pick those up on the chain reaction website and I'll be back next week with another episode of the chain reaction podcast. Until then, I'm tony hines. I'm signing off. Bye for now.