(Yicai Global) Sept. 19 -- A letter sent by the German engine and gearbox manufacturer Schaeffler Technologies AG & Co. KG [ETR:SHA] to the Shanghai local government to seek help after its supplier suspended production attracted attention of the industry, chinacar.com.cn reported.

Yilin Zhang, CEO of Schaeffler Greater China, sought help from the Shanghai Municipal Commission of Economy and Informatization and the local governments of Pudong New Area and Jiading, asking them to provide its cold-drawn wire supplier Shanghai Jielong Metal Wire Drawing Co. a way out after it was found to violate environmental regulations.

The letter said that its only supplier of needle rollers, Jielong Metal Wire, was ordered by relevant government departments to suspend production and dismantle relevant production equipment on Sept. 10 due to environmental violations. Once the company stops supply of needle rollers, more than 200 models at 49 auto works will halt production from Sept. 19, the letter warned.

Once a needle roller goes wrong, it may lead to safety accidents such as cracking of automatic gearbox.

Schaeffler stressed that all of its powertrains will use needle rollers. As Jielong is its only supplier, if it switches to a new supplier, it should take at least three months to recognize the new supplier's technologies and quality and prepare for mass production. The supply deficit of needle rollers is estimated to reach over 1,500 tons, which will in theory cut car production by more than three million units amounting to a loss of CNY300 billion (USD45.5 billion).

Schaeffler asked relevant government departments to allow Jielong to provide cold-drawn wire for another three months without violating relevant environmental laws and regulations to offer enough time for it to switch to a new supplier.

Schaeffler's official Weibo account posted the news yesterday, which confirmed the authenticity of the initial media reports, saying that it immediately communicated with customers, supplier and the government and has arranged global resources to properly handle its supply chain matters. The impact on car production at its engine plants remains under control, it noted.