Howes: Job one in COVID-19 age — putting Michigan back to work
In the age of COVID-19, Detroit's automakers are rising to the challenge — so far — and helping lead the push to put Michigan back to work.
Unbidden, they moved to produce masks, face shields and ventilators to help frontline medical workers caring for seriously ill patients battling the disease caused by coronavirus. As they stopped production to comply with orders from Gov. Gretchen Whitmer and to heed concerns of the United Auto Workers, the automakers moved to conserve cash by delaying product programs, suspending dividend payouts and drawing down existing credit lines.
But the collateral damage that comes from operating in the age of COVID-19 is something else entirely, as Ford Motor Co. is likely to demonstrate Tuesday when it details its first-quarter financials after the markets close. The expected toll: a $2 billion net loss for the quarter, and a cash-burn rate, by some outside estimates, of $4.5 billion in the first three months of the year.
The Blue Oval can't do that "indefinitely," as Executive Chairman Bill Ford told CBS "60 Minutes" on Sunday. Pretty much no one can, save a few tech heavyweights sitting on mountains of cash — which gets to the most important question facing Detroit's automakers: Can they profitably navigate a sharp slowdown at least as nasty as the Great Recession that tipped two of this town's three automakers into bankruptcy?
An affirmative answer proven by results yet to come would ease one of the heaviest burdens weighing on the automakers and their share prices. A slow-rolling financial disaster heading toward yet another Motown bankruptcy, however, would confirm Wall Street's deepest suspicions about Detroit's capacity for change — or not.
As bracing as Ford's numbers are likely to be this week, we're not there yet. The financial carnage of the past two months is a retrospective on where Detroit, Michigan and their intertwined economy already have been. The more important question, now officially engaged Monday by the governor, is how the state economy and its industrial drivers get back to work, in what order and how soon.
"Stopping is simple — doesn't make it easy," Whitmer said in a regular briefing she used to introduced the Michigan Economic Recovery Council of leading business, health care and labor leaders. "Re-engaging is complicated. We don't want our employees to be afraid to go back to work, and when they do, that they feel safe."
Leaders for the automakers and the UAW remain in talks over when and under what conditions to reopen the plants; how the restart, expected to come slowly and in phases, will unspool; where workers will be stationed on assembly lines and what precautions (screening at entry points, temperature checks, mandatory personal protective equipment) will be enforced.
The MERC, as the recovery council calls itself, is devising a complicated set of metrics the governor is expected to follow as she issues executive orders over the coming weeks to reopen the economy. Last Friday, she eased restrictions on intra-state travel, garden centers and landscaping; up next, she signaled Monday likely would be construction and other outdoor work followed by industry, presumably led by the automakers and major suppliers.
Automakers do not expect to restart production before the governor's extension of her "Stay Home Stay Safe" order expires May 15, a ranking industry executive told The Detroit News over the weekend, 11 days after their originally targeted restart date of May 4. Complicating the original timeline: public resistance to the early May restart from Gamble, the UAW president.
The recovery council — co-chaired by DTE Energy Co.'s executive chairman, Gerry Anderson, and the retired CEO of Henry Ford Health Systems, Nancy Schlichting — subdivided the state into eight geographic regions; assessed the disease status of the regions and their health-care systems; divided the labor force across workplace types.
And they've drawn on the deep experience of Michigan-based multinationals with operations in China and Europe — Ford and General Motors Co., Dow Inc. and Southfield-based Lear Corp., among others — for guidance reopening operations and managing amid COVID-19.
Absent a vaccine or "herd immunity," the new normal is likely to look different, as DTE's Anderson noted: "Masks will be ubiquitous in almost every workplace in Michigan" because the alternative for you, yours and the state's economic lifeblood is worse.
Daniel Howes’ column runs most Tuesdays, Thursdays and Fridays. Follow him on Twitter @DanielHowes_TDN. Or listen to his Saturday podcasts at detroitnews.com or on Michigan Radio, 91.7 FM.