Detroit Car Makers Target May 18 U.S. Restart Date -- 2nd Update
April 27 2020 - 8:02PM
Dow Jones News
By Mike Colias and Ben Foldy
Detroit's car companies are targeting May 18 to resume some
production at their U.S. factories after the companies shut down
their plants in March amid the spread of the coronavirus, according
to people familiar with the plans.
Executives from General Motors Co., Ford Motor Co. and Fiat
Chrysler Automobiles NV in recent days tentatively settled on the
timeline after talks with United Auto Workers leaders and Michigan
Gov. Gretchen Whitmer's office, the people said.
The UAW last week expressed concern that reopening factories
early next month -- as earlier target dates had called for --
wouldn't provide enough time to develop safety protocols to protect
workers from the risk of infection.
The companies continue to work with the union on drawing up
safety protocols for reducing exposure risk for workers and have
made progress in recent days, although they haven't finalized those
terms, the people said. A UAW spokesman declined to comment.
A Ford spokeswoman said the company hasn't decided when it will
restart North American factories. "We are continuing to assess
public health conditions, government guidelines and supplier
readiness to determine when the time is right to resume
production," she said.
Last week, Ms. Whitmer extended an executive order closing the
state's nonessential businesses through May 15 to combat the
state's outbreak. Her administration has declined to specify
whether auto assembly is considered an essential economic activity
under the order. A heavy concentration of the companies' factories
and their supply base is in Michigan, and auto makers so far have
voluntarily idled their plants.
The May 18 start date would apply to all of the Detroit
companies' U.S. factories, even in states where stay-at-home orders
are lifting sooner, the people familiar with the discussions said.
The timing would allow the auto makers to finalize safety protocols
with the UAW and give parts suppliers more time to prepare
shipments, the people said.
The ambiguity around the companies' restart plans has left many
automotive suppliers unsure of whether they can legally run their
assembly lines or recall workers in preparation of filling orders
for customers with plants outside of Michigan, suppliers
executives, consultants and attorneys have said.
The car companies have said they will provide protective gear
for workers when they return and will try to maintain
social-distancing protocols in their plants through measures such
as dividers between work stations.
Foreign auto makers, who have nonunionized workforces based
primarily in southern states, have plans to resume production
sooner. Toyota Motor Corp. said it plans to restart some factory
work May 4. Honda Motor Co. is targeting May 11.
The Detroit companies began closing their factories around March
20, as positive Covid-19 cases at car factories began popping up
and much of American society went into lockdown.
The companies have continued to sell vehicles at their
dealerships, though at sharply reduced levels even with heavy
discounts and 0%-financing promotions. But the plant shutdowns have
essentially choked off revenue, because car companies are paid by
dealers when vehicles are shipped from the factory.
Fitch Ratings estimates Ford burned through at least $8 billion
in cash in the first month of the shutdown, while GM used at least
$5 billion.
The auto makers have been working to preserve cash. GM on Monday
suspended its dividend, a step Ford took last month, a day after it
said it would close its North American factories because of the
pandemic. Both companies have tapped credits lines of more than $15
billion, and Ford raised an additional $8 billion in debt.
Fiat Chrysler hasn't suspended its dividend but has tapped
nearly EUR8 billion (About $8.7 billion) from its existing credit
lines while adding a separate EUR3.5 billion credit line, which
remains untapped. The Italian-American auto maker is completing a
merger with Peugeot-maker PSA Group, which would include a EUR5.5
billion special dividend paid to Fiat Chrysler shareholders when
the deal closes.
--Nora Naughton contributed to this article.
Write to Mike Colias at Mike.Colias@wsj.com and Ben Foldy at
Ben.Foldy@wsj.com
(END) Dow Jones Newswires
April 27, 2020 19:47 ET (23:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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