Reopening auto plants will require safety and strategy

DETROIT — The next time many auto workers report to the plants, they might have their temperature taken at the door, fill out daily health questionnaires and wear vibrating wristbands to keep everyone a safe distance apart. But when exactly that day will come remains an expensive question.

Restarting production during the coronavirus pandemic is a moving target as auto makers and suppliers navigate ever-changing state-by-state restrictions, health and safety guidelines and the continued spread of the deadly virus.

After more than a month with virtually no output and therefore no revenue, companies are shaping their plans to restart, with many coalescing around an early May reopening of their North American plants.

Mercedes-Benz was aiming to resume production in Alabama as soon as April 27, while other plants, especially those making less popular and less profitable vehicles, are expected to stay dark longer. Honda is expecting 100 percent output on most of its production lines by the week of May 11, according to someone familiar with production plans.

Hitting the right restart date will be crucial to prevent factory floors from becoming breeding grounds for the virus and to avoid a costly and chaotic start-stop production pattern.

"If they're not pumping out product to bring in revenue, that's going to be a problem at some point," Carla Bailo, CEO of the Center for Automotive Research in Ann Arbor, Mich., told Automotive News, a sister publication of Tire Business. "They still have to pay people, which means money is just going out the door for some of them to do nothing."

The coronavirus outbreak has delayed production and launches, prompting auto makers to max out credit lines and suspend shareholder dividends to build up a cash cushion.

Ford Motor Co. and General Motors Corp. could survive into the fall after their credit line draws left each with at least $30 billion, according to Morningstar. But if the shutdown lasts that long, which Morningstar doubts, that survival would be a painful one. Ford, last week, said it expects a net loss of about $2 billion for the first quarter — a period in which U.S. production wasn't affected until the last two weeks.

When the plants reopen, workers will be subject to vastly different health and safety policies from before. At least two dozen UAW members in the auto industry were known to have died from COVID-19 as of last week.

"If this is going to work, we need to do this right. And importantly the return to work date should be dictated by the science of the contagion curve, not economic factors," UAW President Rory Gamble said in a statement. "If we do this wrong, we all will only have a prolonged economic hardship."

The Detroit 3 and UAW created a joint coronavirus task force last month to coordinate plant shutdowns and plans to protect workers. The task force also could adjust sick-day policies so workers are more inclined to stay home when they feel ill and self-report contact with someone who has the virus.

The auto makers and the UAW are working on advanced safety protocols that have been effective at factories where small numbers of workers are making ventilators and respirators to treat the virus. All of the Detroit 3 are likely to take virtually identical approaches.

"I think there will be one industry solution. We all share the same interest in sharing perspective," GM spokesman Jim Cain said.

In a message to U.S. workers last week, GM said it would focus on three areas:

• keeping sick employees at home;
• enforcing strict safety requirements in the plants; and
• managing cases that are discovered among the work force.

GM will give employees a health questionnaire and temperature screening before they enter a plant, and employees will be required to wear safety glasses and GM-provided medical-grade masks. Workers will have to abide by social distancing rules. If someone gets ill at work, GM has protocols related to cleaning and contact tracing.

Ford is making masks for its employees to wear when they return to work and testing social distancing wristbands, which buzz when employees come within 6 feet of each other.

Fiat Chrysler Automobiles plans to resume operations May 4 at some U.S. and Canadian plants and May 18 at others, the auto maker told suppliers recently All of the plants would initially have just one daily shift.

Marlo Vitous, FCA's head of North America supply chain planning and global inter-regional flow, told suppliers the company will only restart with "safe, secure and sanitized" workplaces.

Auto makers are preparing their supply chains to come back to life, but with states under stay-at-home orders with varying end dates — some of which already have changed multiple times in response to continued reports of new cases and deaths — production logistics will be challenging. Through last week, more than a dozen states had extended stay-at-home orders beyond May 4.

"If you have parts being supplied by a state that isn't under the same guidelines as you, this could make it extremely difficult to open," Ms. Bailo said. "It has to be very coordinated by plant. And there are certain plants, based on customer demand, you're going to want to open sooner than others."

Thomas King, president of J.D. Power's data and analytics division, said he doesn't expect manufacturers to start with full output.

"Run rates in the plants may be slightly lower than normal because of the need to implement these additional safety protocols," he said.

Mr. King is wary of supply chain hiccups that could arise but said the industry will have at least six weeks to prepare by then.

Martin Horneck, FCA's head of purchasing and supply chain for North America, told suppliers that the weakest link will determine the strength of the chain. Mr. Horneck stressed the need for communication among suppliers as the auto maker prepares to revive its factories early next month.

"It's important that you see across your supply chain," Mr. Horneck told them.

Vince Bond Jr. contributed to this report.