Ford production shutdown could go into May, CEO says
Ford Motor Co. on Tuesday said it will further delay restarting production at its North American plants as the COVID-19 outbreak continues to spread in the United States.
The Dearborn automaker last week had shared its intentions to begin manufacturing again at Hermosillo Assembly in Mexico starting next Monday and at select U.S. plants, including Dearborn Truck, on April 14. The plants will remain idled indefinitely, though CEO Jim Hackett indicated the downtime could go into May.
"My gut tells me we're into May now," Hackett told WWJ. "But we're not projecting a date until the president comes on and says, 'I want to turn the economy on by X date.' That's the healthy thing is for all of this to be coordinated together."
Ford began shutting down plants on March 20 in North America. From then to May 1 is 41 days — a day longer than the United Auto Workers' 40-day national strike against General Motors Co. last fall during labor negotiations. GM said it lost $3.6 billion in production during the work stoppage.
Ford's decision comes after the Trump administration this week extended federal social distancing guidelines through the end of April as medical consultants said the United States could see more than 100,000 deaths from the COVID-19 outbreak. And Gov. Gretchen Whitmer on Monday indicated Michigan could be weeks away from a peak in cases.
Unlike Ford, General Motors Co. has not announced a restart date for production since extending its shutdown beyond this past Monday. Some employees, however, have been told to file for unemployment until May 1 in states that require an end date to make the request.
Fiat Chrysler Automobiles NV last week also said its U.S. and Canadian plants would remain closed through April 13, though it is continuing to monitor the situation.
Industry experts have said it is unlikely most plants will restart before May, not only to keep workers safe but because of declines in demand as stay-at-home orders keep people from buying cars and close non-essential businesses, putting people out of work.
"It depends how long essentially the economy is shut down," said Jeff Schuster, president of global vehicle forecasting at LMC Automotive. "They may not need the inventory over the period of time until when demand comes back. It's difficult to predict at this point."
Subaru Corp. said Tuesday evening it was extending the shutdown of its Indiana plant to April 17 from April 6 because of supply chain interruption and declining global demand. Toyota Corp. last week said its North American plants are set to open April 17 with production resuming April 20.
But other companies hope to resume sooner. Volkswagen AG intends to restart production at its Tennessee plant at 10 p.m. April 5. Honda Motor Co. Ltd.'s 12 manufacturing facilities, Nissan Motor Co. Ltd.'s Mississippi and Tennessee plants and Subaru Corp.'s Indiana plant are closed through April 6. Hyundai Motor Co. has suspended production in Alabama until April 10.
The United Auto Workers union had expressed "great concern and caution" over Ford and Fiat Chrysler's plans to restart production in the coming weeks.
“Today’s decision by Ford is the right decision for our members, their families and our nation,” UAW President Rory Gamble said in a statement. “Under Vice President Gerald Kariem, the UAW Ford Department continues to work closely with our local unions and Ford to make sure that as we return to production all members are safe, and our communities are protected from this spreading pandemic.”
Detroit's three automakers have taken out loans and postponed development programs to save cash amid the shutdown. GM and Fiat Chrysler also temporarily are deferring portions of salaried employees' pay and cutting executive compensation.
Ford has not done so yet, Hackett said, noting the company has cut executive pay, deferred raises until October and eliminated salaried workers' overtime. But if the plants remain closed past the end of April and into May, employees could be furloughed where they work for three weeks and then take off one.
"We're doing everything in the early steps to not have to touch their pay," Hackett said. "Furlough is a smart way where you can dial down the compensation. It's painful, but the jobs aren't in question. ... That would be the next thing we could do. We would push go on that when we felt like the rapid return to work had been jeopardized."
Hackett also said Ford is in "pretty good shape" for the rollouts later this year of the Mustang Mach-E electric SUV and the next-generation F-150 pickup, and of the Bronco off-road SUV returning early next year.
The virus "is not going to dampen our spirits of how these new things have to come to market," Hackett said in reference to auto shows, including the North American International Auto Show in Detroit, being canceled or delayed. "If we're a month or six weeks late, I don't think anyone will say we fumbled there because of the virus."
Ford's decision to extend the production shutdown does not affect the automaker's plans to build ventilators at its Rawsonville Components Plant in Ypsilanti starting the week of April 20. Three shifts of 500 total paid UAW volunteers will work to produce 50,000 ventilators in the next 100 days.
The volunteers will have to self-certify online every day. Work stations will be six feet apart, and shifts will be scheduled so the workers from different shifts have no contact. Other high-tech solutions, Ford added, are in the works, as well.
Ford also is working with the British McLaren Racing team and Airbus SE to build ventilators in Europe, Hackett added.
"The emotional and intellectual effort of dozens of our people, I don't know how I am ever going to properly reveal to the public what these folks did," he said. "It's like World War II heroic things when we're building the bombers."