How one small part held up shipments of thousands of autos

One tiny part, a LAN transformer used to connect cars and computers to networks, was built into the control systems of Porsche, Audi, and Bentley autos. The part was manufactured by a Chinese company, JWD Technology, a sub-supplier (tier two), and sold to the automakers as part of a subassembly.

In December, the U.S. government placed JWD Technologies on the banned entities list for imports coming from the Uyghur Forced Labor Region in Xinjiang Provence. Volkswagen Group (parent organization of Porsche, Audi, and Bentley) was notified by its tier 1 supplier that sub-supplier JWD was supplying parts to them and had been blacklisted under the Uyghur Act. Volkswagen Group then halted shipments to the U.S. until the part could be replaced by another supplier—a process that is still ongoing.

JWD Technology had previously listed Tesla, BMW, HP, Cisco, Google, and Amazon as its customers, according to the Wall Street Journal. It’s possible that other automakers and tech companies also used JWD in their products.

Uyghur Forced Labor Prevention Act

The Uyghur Forced Labor Prevention Act (UFLPA) was signed into law in December 2021, reaffirming America’s long-term commitment to combat forced labor worldwide. Under this law, every importer of goods from China must certify that there is no Uyghur content in the imported products including raw materials and labor.

The Frictionless Supply Chain podcast

 

The Uyghur Forced Labor Act Is Causing Disruption and Distress in Global Supply Chains

Listen as Rosemary Coates and Adrienne Braumiller, Founder of the international law firm, Braumiller Law Group, discuss the Uyghur Forced Labor Protection Act.  Rosemary Coates, Executive Director of the Reshoring Institute, hosts this episode of The Frictionless Supply Chain.

Listen

 

U.S. Customs is charged with enforcing the law, starting with the presumption that all products coming from Xinjiang Province are made with forced labor and are banned from being imported. But the legislation goes even further than that. Human rights organizations have discovered that Uyghur workers are now being sent to factories across China to fill worker shortages and to take advantage of low-cost labor. Distinguishing Uyghur workers’ labor from other workers’ labor in supplier factories can be difficult if not impossible.

It’s time to step up supply chain monitoring

Identifying and controlling forced labor in your supply chains requires a whole new level of scrutiny. It is not enough to initially audit and certify your factories and suppliers. Active oversight must be an ongoing effort with in-depth reviews of labor practices.

Quarterly supplier audits used to be sufficient, but not anymore. Tier 1, tier 2, and tier 3 (maybe more) suppliers need to be audited in detail to uncover forced labor parts and labor content. It’s time to be more vigilant than ever. Supply chain managers should visit the factories together with the auditors. You may want to engage a trusted auditor in China to visit the factories often, in between quarterly audits.

To ensure that global supply chains are ethical, safe, and lawful requires knowing all links in the chain, and being vigilant in your oversight.

SC
MR