(This story has been updated to include FCA’s planned production closure and the ordering of Tesla to close its Fremont plant.)
The nation’s three largest domestic automakers have announced plans to start an “orderly” shutdown of their North American manufacturing operations set to extend to “at least” March 30, and possibly beyond, as they cope with the expanding coronavirus pandemic, as well as fast-plummeting sales.
The closures follow meetings between the Detroit automakers and the United Auto Workers union which expressed the concern of workers operating in plants alongside thousands of other employees. Those concerns were escalated in recent days with each new report of plant workers coming down with Covid-19, the disease caused by the coronavirus.
Fiat Chrysler Automobiles late Wednesday became the third automaker to announce the closing of its plant through the end of the month. Separately, Honda said it has ordered a six-day shutdown across North America. In California, where Tesla CEO Elon Musk had given workers the choice of whether or not to report to work at its suburban San Francisco assembly plant, authorities stepped in late Tuesday, ordering the factory shut.
“GM and the UAW have always put the health and safety of the people entering GM plants first, and we have agreed to a systematic, orderly suspension of production to aid in fighting COVID-19/coronavirus,” GM Chairman and CEO Mary Barra said in a statement.
“We’re continuing to work closely with union leaders, especially the United Auto Workers, to find ways to help keep our workforce healthy and safe – even as we look at solutions for continuing to provide the vehicles customers really want and need,” said Kumar Galhotra, Ford’s president of North America, in a separate statement. “In these unprecedented times, we’re exploring unique and creative solutions to support our workforce, customers, dealers, suppliers and communities.”
The decision to shut down all North American Ford and GM plants was not entirely unexpected. All three manufacturers had sent hourly, contract and non-manufacturing hourly staff off to work at home at the beginning of this week. The automakers had come under increasing pressure from the UAW to better protect production workers, as well, from the highly contagious coronavirus – especially after several were diagnosed with COVID-19, the disease caused by the virus.
An FCA plant in Sterling Heights, Michigan has already been closed because of that. Ford closed its Michigan Assembly Plant on Wednesday when a worker there was diagnosed with COVID-19.
“UAW members, their families and our communities will benefit from today’s announcement with the certainty that we are doing all that we can to protect our health and safety during this pandemic,” said UAW President Rory Gamble. “This will give us time to review best practices and to prevent the spread of this disease. We appreciate General Motor’s actions today and will continue to work with them on health and safety plans to be implemented when we resume production.”
There are other reasons for the temporary closures, however. Along with the risk of further infection among workers, GM noted it was responding to “market conditions.”
In China, were the coronavirus outbreak first occurred, new vehicle sales tumbled 79% last month. While data has not yet been released, industry sources have told TheDetroitBureau.com that sharp downturns already appear to be taking place in the U.S. and European markets.
How far down demand will go is far from certain, but it would be costly, according to Kristen Dziczek, vice president at the Center for Automotive Research. She warned that just a one week halt to car sales would cost the U.S. economy 94,400 jobs and $7.3 billion in overall earnings.
The Detroit automakers aren’t the only ones curbing production in North America. On Wednesday, Honda said it was also shutting down its plants in the U.S., Canada and Mexico for six days. Other automakers operating in the region are widely expected to follow. Tesla, which originally tried to remain open, was given no option but to close this week. Its Fremont, California plant is located in the midst of a six-county area now facing a shelter-in-place order covering about 7 million residents.
Separately, virtually all European automakers have now shut down their own manufacturing operations for at least a couple weeks.
Joe Szczesny contributed to this report.