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Thursday, 16 April 2020 16:37

Automakers Will Need Months to Get Factories Up and Running

Written by Gabrielle Coppola and Craig Trudell, Bloomberg Law

Index

Automakers are anxious to get their assembly lines rolling again, especially since leaving factories idle is costing them billions of dollars by the week.

But the experience many of them have had in China illustrates just how long a slog it’s going to be before plants are producing at anywhere near pre-shutdown levels. It took almost two months for most of China’s industry to return to some semblance of normalcy---and that was with the benefit of mobile apps the government installed on citizens’ cell phones to track their movements and potential exposure to COVID-19 infected people.

 

North American factories may have the benefit of Apple Inc. and Google trying to start a similar contract-tracing effort, but participation will be voluntary. And the tensions brewing already between President Donald Trump and state governors indicate U.S. government efforts won’t be nearly as centralized as China’s was, suggesting that already cash-strapped suppliers may also have to deal with a patchwork of state-by-state orders dictating when businesses can reopen.

 

“Discipline is the key to success,” Jim Tobin, president of Asia operations at auto parts maker Magna International Inc., said last week. “In China, there’s mandates that come out. Here, there are requests.”

 

Magna and other companies implemented dozens of protocols---including worker-temperature screenings and physical distance barriers---to open factories on single shifts, Tobin said during a webinar hosted by the Center for Automotive Research in Ann Arbor, MI.

 

Many vehicle and parts plants in North America had been running multiple shifts to meet demand that’s held steady near all-time highs for years. Now, sales have cratered and are unlikely to recover quickly.

 

Tesla Inc. and Fiat Chrysler Automobiles NV both are planning to begin reopening U.S. plants on May 4 after idling them in mid-March. General Motors Co. and Ford Motor Co. have refrained from scheduling restart dates for their facilities, while Toyota Motor Corp. and Honda Motor Co. have said theirs will be down through at least May 1.

 

While setting dates to reopen sends a signal to suppliers to start getting their parts inventories ready, doing so won’t be simple, with new layers of precautions and complications that didn’t exist before shelter-in-place orders came into effect nearly a month ago.


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