Automakers are cautiously coalescing around plans to reopen North American assembly plants early next month following what will be a roughly six-week shutdown for virtually the entire industry.
Toyota, Tesla, Hyundai and Volkswagen are among the major automakers that have said they intend to resume production in the first week of May. Even if they stick to that schedule, many won’t restart all their factories at once, and the facilities that do restore output will run assembly lines at slower rates than they did pre-shutdown.
The non-unionised carmakers’ intentions add to the urgency of talks General Motors, Ford and Fiat Chrysler Automobiles are having with the United Auto Workers that weigh the need to get back to business against the possibility that reopening will sicken employees. Of the three, only Fiat Chrysler is confirming plans to progressively restart beginning May 4, pending approval from governments and unions.
“A lot of automakers are looking at some point in May starting production for at least half or a majority” of their plants, prioritising those making lucrative pickups and SUVs, said Jeff Aznavorian, president of Clips & Clamps Industries, a supplier to Fiat Chrysler and other manufacturers. “All of them are planning on staggering those openings to make sure their processes are in place so they can go back to work safely.”
Weeks ago, analysts assumed there would be little reason for the industry to rush its restart. Sales in China plummeted almost 80 per cent in the wake of the country’s coronavirus outbreak early this year, and some were expecting a decline of similar magnitude for the US. Yet demand has held up better than expected, with researchers LMC Automotive and JD Power predicting a roughly 50 per cent decline this month.
While the UAW lwon’t want to put its companies at a competitive disadvantage or keep its members from earning bigger paycheques again, the union also is leery of reopening plants too soon after two dozen union workers at Ford, GM and Fiat Chrysler have died of Covid-19 complications.
“The one thing that is a priority of all parties is the health and safety of UAW Ford, General Motors and FCA employees, their families and their communities,” Rory Gamble, the union’s president, said in a statement.
Because many factories were running at full speed prior to the shutdown, automakers were carrying plenty of inventory. The process of restarting production will unfold in stages and it could take months for certain products to return to full capacity.
“We do expect to see a slow ramp-up of volumes over the coming weeks” starting the first week of May, said Julie Fream, chief executive of the Original Equipment Suppliers Association, an auto parts industry trade group. “That doesn’t mean that all plants will be back online and certainly not that all shifts will be working.”