Leoni's Ukrainian workers make wire harnesses and dodge missiles

BERLIN — Under constant risk of Russian rocket attacks, workers at German wire harness supplier Leoni's two Ukrainian plants are ramping up production to help keep their European automakers building vehicles.

On multiple occasions, workers have had to flee to on-site bunkers for safety, Leoni CEO Aldo Kamper said last week.

Despite making auto parts in a war zone, the supplier says it has brought local production levels back to 40 percent of capacity after a temporary halt because of Russia's invasion of Ukraine. And even with a nighttime curfew, Leoni is now adding a night shift to get the plants up to 70 percent.

War is disrupting Europe's auto industry. And Ukraine's previously unappreciated role as a supply base is now proving to be a pinch point. Labor-intensive wire harnesses are typically made in low-cost countries — Ukraine, for example. Now several of Europe's auto plants are vulnerable.

But Leoni, which specializes in wire harnesses — with plants also in Romania, Serbia, Slovakia, Tunisia, Egypt and Morocco — is determined to keep normalcy flowing across Europe.

Speaking to analysts last week in Europe, Kamper reported that cross-border trade is still possible, despite the Russian invasion, with the supplier able to source its own components and raw materials and export products.

Whenever there is an air raid alert, employees have to go to a shelter, either on the supplier's premises or at home. According to Kamper, they then remain sheltered for hours in temperatures a few degrees above zero, unsure of how it will turn out, "and then return to work."

There are also alarms at night, so people have to go to the air raid shelters when they are at home. As a result, the CEO said, there is a sleep deficit.

"When that's the case, we naturally have much more difficulty achieving normal productivity the next day and then cut shifts accordingly to give people a chance to regenerate," he said.

But the employees want to show that Ukraine wants to be part of the European supply chain structure for the long term.

Two-thirds of Leoni's 7,000 Ukrainian employees are women. Among the men, many are reservists who have not been called up, but several hundred have left the plants to volunteer for the fight in eastern Ukraine.

In addition, some women have fled with their children to Romania for safety and are now supporting the supplier in production there.

Volkswagen, Porsche, BMW, Mercedes-Benz and Ford are among automakers that have been forced to cut production at their factories in Germany after supplies of wire harnesses, which form a key part of a vehicle's electrical system, dried up.

"It is both impressive and moving how our employees are determined not to let the situation get the best of them but stand up for their country and for their way of life," Kamper said. "Their safety and their lives are a top priority for us."

But he told analysts that some production is being relocated to Leoni's other plants, even though both the company and its automaker customers are committed to keeping Ukraine as a supplier.

"This is not a trivial task," he said of relocating 750,000 square feet of production space. A single location will not be able to do that. Much will be relocated to Romania and Serbia.

Western Ukraine, with its low-cost, highly skilled work force and proximity to Europe's auto factories and a wealth of raw materials, has grown into a major production hub for wire harnesses. Japan's Fujikura and France's Nexans also produce there.

In addition to its 7,000 employees in Ukraine, Leoni has 2,000 more working in Russia. Before the invasion, it had expected to bring in about $441 million in revenue from the two countries this year. But the outlook is now unclear.

Up to 15 percent of European auto production could be at risk — just because of shutdowns at wire harness factories in Ukraine after the Russian invasion, Colin Langan, an auto analyst at Wells Fargo, said this month.

Klaus-Dieter Floerecke, with Automobilwoche, a German-language sibling publication of Automotive News, contributed to this report.