Industry Reopening: Auto Manufacturing

As many U.S. states look to reopen for business, at least in phases, different industries are impacted in different ways. Several U.S. automobile manufacturers in Detroit, including Ford, General Motors and Fiat Chrysler, are targeting the end of May to resume automobile production. This is after some plants shifted operations to produce PPE and ventilators, either voluntarily or as a result of the Defense Protection Act. 

Plant operations will look much different than they did before COVID-19 caused plant shutdowns in March. Workers will be wearing PPE, including face masks, and will be asked to agree to temperature checks and sharing information on symptoms. Plastic sheeting or shields will be installed throughout assembly lines, and precautions for shared break rooms and sanitizing will also become the new norm. 

These precautions, and the decision to keep the particular plants closed, are attributed to the strong union presence in Detroit’s automobile industry. In other parts of the country, plants have already resumed operations. Some plants in the South, traditionally a non-union area, resumed operations this week.  

Reopening: Not Just Flipping A Switch

Regardless of when plants open, it’s clear that prior production levels won’t resume as soon as workers report back. There will be an adjustment period to new production lines; new procedures; how to interact with co-workers in a COVID-19 workspace; and workers will need to ramp up after being idle for so long. These procedures are certain to slow down production, at least initially, as on-site managers and workers, employees from suppliers and distributors, and all facets of plant operations adapt. Toyota told NBC News that its May 4 reopening date was the day workers returned to the plant, but not the day that car production began. 

Factoring in the Global Supply Chain

Another factor in production is the global nature of both the automobile supply chain and COVID-19. Mexico is the home of many parts suppliers to U.S. auto factories, with as much as 40 percent of international parts coming from Mexico. As well, many U.S.-manufactured parts are sent to Mexico for assembly. The two countries’ industries are linked, and one cannot fully reopen without the other. Ideally, manufacturing plants and suppliers would open at the same time to ensure no disruptions to the supply chain. Experts estimate that there’s enough product in the existing supply chain to support U.S. production for a short period of time. But if Mexico has a long reopening delay after U.S. plants start production, supply chain issues will come to head. 

On May 5, Mexican President Andres Manuel Lopez Obrador suggested that operations at suppliers may resume in the next few weeks. Reopening may be done through a regional approach, however, based on COVID-19 infection rates, which means uncertainty for which U.S. plants and production lines could be served before others. In addition, Mexican suppliers will go through periods of ramping up, just like U.S. manufacturers. 

Clearly, the U.S. auto industry has many decisions to make about reopening, factoring in health, economic and political factors. And many are excited to see Americans report back to work. But the uncertainty of COVID-19, both domestic and international, will require measured steps to get production moving at a significant rate.  

RESTORE YOUR ECONOMY

Website by Accrisoft