F Ford Motor Company

By Mike Colias and Ben Foldy 

The United Auto Workers and Detroit car companies reached agreements on coronavirus-mitigation efforts that for now will avoid a two-week shutdown of U.S. factories.

The UAW had been pressing General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV to idle their plants to protect workers from the virus. The union said late Tuesday that company executives had agreed to partial shutdowns of plants to allow for cleaning between shifts and longer periods for shift changeovers, along with other measures to minimize worker contact.

A GM spokesman declined to comment on the new measures and said the company has been working on mitigation efforts for weeks. A Fiat Chrysler spokesman confirmed the company agreed to additional safety precautions. Ford didn't immediately reply to requests for comment.

Meanwhile, Ford confirmed Tuesday evening it temporarily closed the company's Chicago assembly plant because of a parts shortage. A nearby Lear Corp. plant that supplies parts to the Ford factory is closing temporarily after two employees tested positive for Covid-19, people familiar with the matter said. The plant was closed for disinfection after one worker tested positive and another is likely to have contracted the disease, a Lear spokesman said.

The Ford factory, which makes the Ford Explorer and Lincoln Aviator sport-utility vehicles, is expected to be down for at least Tuesday night's eight-hour shift and for part of Wednesday, the people said.

Shutting off production across U.S. factories would deal another financial blow to the Detroit auto makers, which have been grappling with virus-related disruption globally. The outbreak in China has decimated vehicle sales there and caused ripple effects through the global automotive supply chain.

Ford is considering cutting shifts at some of its U.S. factories to limit the risk to employees, although no final decision has been made, people familiar with the matter say. If the cuts are enacted, it would mark the first time an auto maker in the U.S. has significantly curtailed production because of the outbreak.

Eliminating a shift at a factory that works round the clock on three shifts would allow more time for disinfecting the facility, a person with knowledge of the company's deliberations said. It also would reduce the mingling that occurs between workers on shift change, the person said.

In Europe, Ford and other major car companies have temporarily closed their factories as the outbreak has spread there.

On Tuesday, local authorities told Tesla Inc. that it must stop production at its Fremont, Calif., factory as part of an order by Alameda County to have people shelter at their homes to prevent the spread of coronavirus.

Shutting down plants results in an immediate hit to the bottom line for car companies, which book revenue as soon as they ship vehicles from the factory to dealerships. A 40-day strike at GM's U.S. plants last fall drained $3.6 billion from GM's bottom line.

Some factory workers have complained on social media that they feel unsafe showing up for work, particularly as many of the companies' white-collar employees were told to work from home.

"There is serious concern from our employees and rightfully so," said Todd Dunn, president of the union's chapter representing Ford's Louisville, Ky., plants. "If I could send them home and give them money, I would."

Global auto makers have been relying on the health of the U.S. market this year, as China and more recently Europe have seen car sales and production collapse as a result of the pandemic.

So far, car companies have fended off parts shortages to keep plants running in the U.S., which accounts for the lion's share of profits at GM, Ford and Fiat Chrysler. The prospect of auto makers cutting U.S. production has Wall Street analysts scrutinizing their balance sheets to gauge how well they could weather a prolonged shutdown.

The Detroit companies are in a much stronger cash position than they were heading into the financial crisis a decade ago, which ultimately forced GM and Chrysler into bankruptcy.

At the end of last year, GM and Ford each had at least $35 billion of cash and liquidity, while Fiat Chrysler had about EUR15 billion ($16.5 billion), according to securities filings.

In an investor note Tuesday, Morgan Stanley analyst Adam Jonas said the companies "are categorically in a strong position to absorb several months of a near shut-down."

Matthew Schulte, who works in the body shop at a Ford truck plant in the company's hometown of Dearborn, Mich., said many of his co-workers were anxious about exposure to the virus at work.

"If the schools and restaurants and everyone else is hunkering down, and we're still making trucks for people who likely aren't buying them, it doesn't quite add up," said Mr. Schulte, 47 years old.

He added, though, that many workers are also worried about losing their paychecks without any clarity over when the factories might come back online.

Ian Lovett contributed to this article.

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

(END) Dow Jones Newswires

March 17, 2020 23:52 ET (03:52 GMT)

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