Nissan, Honda Furlough 24,000 -- WSJ
April 08 2020 - 3:02AM
Dow Jones News
Cost-saving steps at U.S. factories will last through end of
month as car sales plunge
By Sean McLain in Tokyo and Ben Foldy in Detroit
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (April 8, 2020).
Two of Japan's largest car companies, Nissan Motor Co. and Honda
Motor Co., are furloughing U.S. factory workers without pay, adding
to unemployment in an industry that has seen sales plummet during
the spread of the new coronavirus.
Nissan said on Tuesday it would place about 10,000 U.S. hourly
workers employed at plants in Tennessee and Mississippi on furlough
until late April, calling the move a temporary layoff.
Honda also this week notified staff it would furlough about
14,400 factory employees in the U.S. as it extends a production
shutdown to May 1. The Honda furloughs start Monday.
Affected workers at both Honda and Nissan can apply for enhanced
unemployment benefits from the government. Both companies said the
workers will retain benefits such as health care.
Nissan workers stopped receiving paychecks on Sunday except for
a handful deemed essential, a Nissan spokeswoman said. She declined
to say how many of the workers would be rehired, although Nissan
has said that rebuilding sales in the U.S. is a key part of its
plan to reverse years of declining revenue and profit.
At Honda, the company will pay workers' wages for part of this
week and allow them to use paid time off to cover the rest, a
spokesman said.
The U.S. has had record jobless claims after many cities locked
down to block the virus's spread.
Manufacturers, and particularly car makers, have been among the
worst-hit. The auto industry shut down nearly all U.S. production
in March, and combined General Motors Co., Ford Motor Co. and Fiat
Chrysler Automobiles NV have laid off about 150,000 hourly
employees.
While workers at the Detroit car makers may draw some protection
from their union contracts, factory workers at most foreign car
makers in the country aren't unionized. Japanese car makers
typically are loath to lay off U.S. workers, and have used that as
a justification for the lack of union representation at their
plants in the country.
Toyota Motor Corp. hasn't furloughed any workers despite idling
production last month, a company spokesman said. Production workers
are receiving full pay through Friday and can use paid time off the
following week, he said, noting that Toyota's North American plants
are set to reopen April 20.
In March, U.S. car sales fell nearly 40% from a year earlier,
according to MarkLines, a Japanese automotive-data firm. Nissan's
sales fell 48%. Honda also reported a 48% decline in U.S. sales
last month as shelter-in-place orders took effect in many states,
causing business to drop off.
In February Nissan announced its first quarterly loss since
2009. It is working on a recovery plan, but those efforts have been
clouded by the virus pandemic. As a result, Nissan is hoarding
cash. Workers in Spain also have been laid off. Outside of China
and some plants in Japan, all of Nissan's manufacturing facilities
are closed.
As news of the U.S. furloughs broke, Nissan executives were
briefing board members on the details of their response to the
pandemic. One person familiar with the discussions said Nissan was
looking at ways to obtain loans from governments in Japan, the U.S.
and Europe as well as tapping banks.
Nissan management is also looking at pay cuts, said people
familiar with those discussions. Chief Executive Makoto Uchida and
his deputy, Ashwani Gupta, are expected to forgo performance-based
pay, the people said.
Executives say Nissan isn't in immediate danger of running out
of cash, and analysts have described the company's balance sheet as
relatively healthy, assuming the shutdown doesn't stretch into
summer or fall.
Nissan has assembly plants in Smyrna, Tenn., and Canton, Miss.
Most of the furloughed workers are expected to return to work on
April 27, according to the company. Workers at Nissan's engine
plant in Decherd, Tenn., are expected to resume work on April
24.
Write to Sean McLain at sean.mclain@wsj.com and Ben Foldy at
Ben.Foldy@wsj.com
(END) Dow Jones Newswires
April 08, 2020 02:47 ET (06:47 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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