U.S. car companies have been in the rhythm of shutting down production since March 18, local time, due to the new crown epidemic. Although Ford and General Motors and other car companies have notified employees to work at home since Monday in an attempt to reduce the impact of the epidemic, but can not withstand the ferocious development of the epidemic, the cumulative number of diagnosed people in the U.S. as of March 19 has reached 9,410, second only to Germany ranked the world's fifth. Since March 18th, U.S. factories including GM, Ford, Fiat Chrysler, Honda, Nissan, Toyota and other brands have announced that they are shutting down production or will soon do so. In addition to the Detroit Three, including BMW, PSA, Volkswagen and other European manufacturers, all into the rhythm of production stoppages. From Europe to North America, the car companies a mournful sound of closure.
The three giants collectively announced the shutdown
Fiat Chrysler (FCA) announced in early March the closure of four factories in Italy, but the development of the raging epidemic makes it difficult for North America to become a clean slate as well.FCA officials said it will start closing its North American factories from March 18th, and continue until the end of March.
Two confirmed cases of the new crown outbreak have already surfaced among FCA workers, one from FCA's Sterling Heights Assembly Plant in Michigan and the other from the Kokomo Transmission Plant in Indiana.
The two brands, GM and Ford, announced simultaneous shutdowns Wednesday (18) local time in the U.S. that will last until the end of March. Ford and GM will close all plants in the United States, Canada, and Mexico. Just on Monday, Ford and GM had also said that they had arranged for all non-production line and non-critical position employees to telecommute from home to reduce the risk of infection. But the decision to officially close the plants was not expected just two days later.
On March 18, U.S. time, Ford officially said, from Thursday night to March 30, Ford in the United States, Canada, Mexico, the plant all closed; UAW (United Auto Workers) and Ford leadership on both sides, will be in the premise of ensuring that the health and safety of workers and the production process, will negotiate a program of return to work; in addition, Ford in Germany, Romania, the plant will also be temporarily closed. In addition, Ford's factories in Germany and Romania will also be temporarily closed.
GM's?CEO?Mary?Barra said in an official statement that GM has taken precautions globally to ensure a safe production environment at its plants. The recent developments in the North American outbreak have determined that we are right to shut down production now.
▲GM CEO?Mary?Barra
Pressure from U.S. labor unions
FCA, Ford and GM made the decision to shut down the plant at this time, in part because of pressure from the United?Auto?Workers (UAW).
Back on March 15, the UAW began urging GM, FCA and Ford Motor Co. to shut down production for two weeks in order to protect workers from the new coronavirus, which several companies refused. The union then gave the Big Three two days to come up with a plan to protect workers. But the UAW's willingness to call for a shutdown grew stronger as the outbreak progressed.
As recently as Tuesday, the prevailing idea at the Big Three was still to continue production. But after the UAW met and negotiated with the leadership of the Big Three on Tuesday night, the Big Three ultimately made the decision to halt production.
The power of the UAW's auto unions is clear from this "order" to shut down the Big Three. As UAW President Rory Gamble said in Ford's official news release: "The plant closures are necessary at this stage to protect UAW members, as well as the safety of their families and communities. ...... So we are asking Ford to work with us to take strong measures (We?recommend?Ford?for.
Ford?for.
The U.S. Auto Workers Union (UAW) is the only union in the U.S. that has the power to shut down factories. Ford?for?working?with?us?and?taking?this?bold?step).
The tone, apparently, is unquestionable.
▲Rory?Gamble, president of the UAW
FCA CEO?Mike Manley was even very gracious in an official statement. "I accompanied the UAW on a tour of our plant, and we want to make sure that our employees here are safe, and we have provided all the necessary protections, and will protect our employees as much as possible in the future."
But while all three Detroit giants have announced shutdowns, it's not like there's nothing left to do - at least they can transition to producing medical equipment. A spokesman for GM said it was already studying the feasibility of transitioning to medical equipment such as ventilators.
Besides the big three, multinational automakers have been shutting down
Honda plans to shut down production from March 23 until the end of the month, including all its plants in the United States, Mexico and Canada. But its official statement, the main reason mentioned is "taking into account the impact of the new crown epidemic on the economy, the automobile market is expected to reduce demand. During the same period, Honda's transmission and engine plants are also synchronized with the shutdown. The shutdown will result in an expected reduction of 40,000 vehicles in Honda's production.
Honda said it will pay the salaries of its 27,600 North American employees in full despite the shutdown, and will also use the time to deep-clean and sanitize its plants and equipment.
Toyota will close 14 plants in North America next Monday and Tuesday, using the closure time to deep clean the plants. Also on March 18, Nissan announced it would officially shut down production starting March 20 and lasting until April 6th. Tesla's California factory, while not currently planning a shutdown, plans to reduce the number of workers on duty per shift.
In the European market, BMW Group said on the 18th, due to the impact of the epidemic, supply chain difficulties, while taking into account the health of workers, BMW's factories in Europe and South Africa will be shut down for four weeks. The loss of production capacity of the closed factories accounted for half of the global capacity.
Germany's Volkswagen announced on March 17 that it would close most of its plants in Europe, shutting down production for at least two weeks. A number of those plants, located in Spain, Portugal, Slovakia and Italy, will be shut down by the end of the week. Plants in Mexico, Brazil and the United States are producing as normal.
On March 16, one of Europe's largest automotive groups, PSA Group announced the closure of all its plants in Europe with immediate effect, and the closure will last until March 27th. As one of the largest automobile groups in Europe, PSA has factories in France, Spain, the United Kingdom, Germany, Portugal and Poland, *** counting 15. The plants will be closed one by one from March 16 until March 19, when all of them will be closed.
Renault, the French car brand, also announced on March 17 that it would close all its plants in France, with no time set for resumption of production. Ferrari, Lamborghini and other luxury car brands in being in Italy have also long announced the shutdown of production.
The last word?
The reason for the widespread shutdown of multinational car companies in the European and American markets comes from two sources, one being the potential threat to worker health from the epidemic. Especially in the United States, including FCA, Ford, Hyundai, a number of car companies, including FCA, Ford, Hyundai, there have been workers infected with the new crown virus news broke. In addition, the pressure from labor unions makes car companies never dare to take it lightly. In particular, the U.S. labor unions are exceptionally powerful, once there is a failure or accident, the lawsuit may make the car companies back a huge amount of claims.
On the other hand, it is the pessimistic expectation of the decline of market demand in Europe and the United States. Morgan Stanley previously released a forecast report, said the impact of the epidemic, 2020 U.S. auto sales are expected to fall 9% year-on-year, reducing demand by 1.6 million units. From the fact that the Chinese market has occurred can be seen, such a prediction is not exaggerated. The Passenger Car Association expects the Chinese market to lose 2 million passenger car retail sales this year. Vehicle companies like Honda and Toyota, which attach great importance to inventory management, have chosen to voluntarily shut down production and reduce output to cope with market fluctuations.
Sources from BMW said that due to the impact of the epidemic, BMW Group forecasts that its profit margins will fall by about half to 2-4 percent in 2020, down from 6.8 percent in 2019. If the epidemic continues to spread, BMW can't be ruled out of closing more factories after it has shut down plants in Europe and South Africa. That would have an even bigger impact on BMW's revenue. Because there are too many unknowns, more multinational giants are still difficult to make accurate predictions, but the probability is that this year, we have to tighten our belts to get by. And as the epidemic develops, there's no telling when it will end.
The main theme of policy in the global auto market this year will probably all converge into two words: bailout!
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