Bulletin
Investor Alert

New York Markets Close in:

April 27, 2020, 8:48 p.m. EDT

Detroit auto makers aim to reopen factories May 18

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

or Cancel Already have a watchlist? Log In

By Mike Colias

Detroit's car companies are targeting May 18 to resume some production at their U.S. factories after the companies shut down their plants in March amid the spread of the coronavirus, according to people familiar with the plans.

Executives from General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV in recent days tentatively settled on the timeline after talks with United Auto Workers leaders and Michigan Gov. Gretchen Whitmer's office, the people said.

The UAW last week expressed concern that reopening factories early next month -- as earlier target dates had called for -- wouldn't provide enough time to develop safety protocols to protect workers from the risk of infection.

The companies continue to work with the union on drawing up safety protocols for reducing exposure risk for workers and have made progress in recent days, although they haven't finalized those terms, the people said. A UAW spokesman declined to comment.

A Ford spokeswoman said the company hasn't decided when it will restart North American factories. "We are continuing to assess public health conditions, government guidelines and supplier readiness to determine when the time is right to resume production," she said.

Last week, Ms. Whitmer extended an executive order closing the state's nonessential businesses through May 15 to combat the state's outbreak. Her administration has declined to specify whether auto assembly is considered an essential economic activity under the order. A heavy concentration of the companies' factories and their supply base is in Michigan, and auto makers so far have voluntarily idled their plants.

The May 18 start date would apply to all of the Detroit companies' U.S. factories, even in states where stay-at-home orders are lifting sooner, the people familiar with the discussions said. The timing would allow the auto makers to finalize safety protocols with the UAW and give parts suppliers more time to prepare shipments, the people said.

The ambiguity around the companies' restart plans has left many automotive suppliers unsure of whether they can legally run their assembly lines or recall workers in preparation of filling orders for customers with plants outside of Michigan, suppliers executives, consultants and attorneys have said.

The car companies have said they will provide protective gear for workers when they return and will try to maintain social-distancing protocols in their plants through measures such as dividers between work stations.

Foreign auto makers, who have nonunionized workforces based primarily in southern states, have plans to resume production sooner. Toyota Motor Corp. said it plans to restart some factory work May 4. Honda Motor Co. is targeting May 11.

The Detroit companies began closing their factories around March 20, as positive Covid-19 cases at car factories began popping up and much of American society went into lockdown.

The companies have continued to sell vehicles at their dealerships, though at sharply reduced levels even with heavy discounts and 0%-financing promotions. But the plant shutdowns have essentially choked off revenue, because car companies are paid by dealers when vehicles are shipped from the factory.

Fitch Ratings estimates Ford burned through at least $8 billion in cash in the first month of the shutdown, while GM used at least $5 billion.

The auto makers have been working to preserve cash. GM on Monday suspended its dividend, a step Ford took last month, a day after it said it would close its North American factories because of the pandemic. Both companies have tapped credits lines of more than $15 billion, and Ford raised an additional $8 billion in debt.

Fiat Chrysler hasn't suspended its dividend but has tapped nearly EUR8 billion (About $8.7 billion) from its existing credit lines while adding a separate EUR3.5 billion credit line, which remains untapped. The Italian-American auto maker is completing a merger with Peugeot-maker PSA Group, which would include a EUR5.5 billion special dividend paid to Fiat Chrysler shareholders when the deal closes.

--Nora Naughton contributed to this article.

Write to Mike Colias at Mike.Colias@wsj.com and Ben Foldy at Ben.Foldy@wsj.com

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.