Ford Motor, General Motors, Fiat Chrysler Automobiles have agreed to United Auto Workers demands to shut down all North America plants as a precaution against coronavirus.
Ford said that after Thursday evening shifts, the company will temporarily suspend production at its North America plants through March 30 to clean its facilities to protect its workforce and boost containment efforts for the coronavirus.
Ford said it will continue to work closely with union leaders to find ways to help keep workers healthy and safe, “even as we look at solutions for continuing to provide the vehicles customers really want and need,” said Kumar Galhotra, Ford’s president of North America. “In these unprecedented times, we’re exploring unique and creative solutions to support our workforce, customers, dealers, suppliers and communities.”
Today’s action is prudent, said UAW President Rory Gamble.
“By taking a shutdown and working through next steps, we protect UAW members, their families and the community,” said Gamble. “We have time to review best practices when the plants reopen, and we prevent the possible spread of this pandemic. We commend Ford for working with us and taking this bold step.”
Earlier, Ford temporarily closed Michigan Assembly Plant in Wayne after an employee tested positive. Ford is cleaning and disinfecting the building. Ford will halt production there through March 30.
General Motors also confirmed Wednesday it will begin a “systematic orderly suspension of manufacturing operations in North America due to market conditions and to deep clean facilities and continue to protect people.”
Its suspension of production will last until at least March 30, the company said. After that, production status will be evaluated week-to-week.
“GM and the UAW have always put the health and safety of the people entering GM plants first,” said GM CEO Mary Barra. “We have been taking extraordinary precautions around the world to keep our plant environments safe and recent developments in North America make it clear this is the right thing to do now.”
GM will suspend operations in a cadence to ensure an orderly production halt, with each facility receiving specific instructions from manufacturing leadership.
No details on the shutdowns at Fiat Chrysler Automobiles have been released yet.
Volkswagen Group of America said it has closed its offices in Auburn Hills because an employee there tested positive for coronavirus.
Volkswagen said the building will remain shut while it undergoes a deep cleaning. The person had a fever a week ago and has since stayed home from work. Other employees were immediately informed and have since been in self-quarantine. The person who tested positive no longer has symptoms but remains in self-quarantine, Volkswagen said in a statement.
A stream of workers at the plants confirmed to the Detroit Free Press, part of the USA TODAY Network, that they were notified about plans to shut down after noon.
Workers agreed a shut down is necessary.
Tommy Wolikow, a general assembly worker at General Motors’ Flint Assembly plant, said he worries every day he goes in the plant that he might get coronavirus and pass it on to his 2-year-old and 7-year-old children.
“Walking into work each day, I had that feeling that it’s scary walking past somebody and handing parts to somebody … I could contract the virus,” said Wolikow. “What’s really scary is I feel this hasn’t even peaked yet.”
Wolikow said he also worries about how the shutdown will affect the economy. He said his 401 (k) took a big hit since the coronavirus crisis started in late January. He’s saved enough money to get by for now, but worries about the impact of a prolonged shutdown.
But others say at this point idling the plants was necessary.
“It’s the right thing to do,” said Todd Dunn, president of UAW Local 862, which includes 14,300 members at the Kentucky Truck Plant and Louisville Assembly Plant. “The bigger picture issue is to figure out a long-term plan. This is not gonna be a two-week issue. This could be a two-month issue. A long-term plan is just as important if not more important.”
Uncharted financial territory
A shutdown was expected, some analysts said, but it will hurt the companies financially.
“It doesn’t come as a surprise, especially after all the plant closings in Europe,” said Michelle Krebs, executive analyst for Cox Automotive. “We anticipate sales will drop. Frankly, they don’t need all of that production right now. Inventories are in pretty good shape.”
John McElroy, a veteran industry analyst and host of “Autoline After Hours,” said in response to news of a shutdown, “The Detroit Three tried to keep their plants running to see if they could avoid a financial disaster. But the virus outran their efforts. Now they’re entering uncharted territory, and in a worst case scenario they’re going to need financial help once the crisis is over.”
The decision to idle was likely a difficult decision for the Detroit Three (Ford, GM and FCA), said Jon Gabrielsen, an auto industry economist. He said for every assembly plant job there are four other jobs in the industry and community connected to it.
Karl Brauer, executive publisher of Kelley Blue Book, said the shutdowns are unfortunate, but not unexpected.
“There was no reason to think auto manufacturing would be immune to the impact of COVID-19. We’ve already seen it alter business practices across every sector of the U.S. market,” said Brauer. “This is another example of being potentially over cautious early in an outbreak versus trying to catch up after things have gone sideways. I’ll take the former option every time.”
The long-term impact on production and sales is impossible to predict, said Brauer. But many retail sectors are slowing down, so the idling production may be prudent even without any coronavirus at the plants.
Follow Detroit Free Press reporter Jamie L. LaReau on Twitter: @jlareauan.