What the 'Historic And Unprecedented' Auto Plant Shutdowns Mean for Workers

Also today on Speed Lines: How Ford is weathering another looming economic crisis. 

Exterior view of the General Motors Bedford Powertrain
SOPA Images/LightRocket via Gett—© 2019 SOPA Images

Welcome back to Speed Lines, The Drive's morning roundup of what matters in the world of how we get around. We're gonna get through this. 

American Auto Production Grinds To A Halt

Yesterday Honda, Ford, General Motors and Fiat Chrysler all announced they'll be winding down U.S. automotive production as part of an effort to avoid the spread of coronavirus among workers. The Big 2.5 were pushed by the United Auto Workers union to do so, and many of those automakers, and others, had already done the same in Europe and Asia. 

Toyota and Nissan have since followed suit, so what we're looking at is a near-total temporary shutdown of American automotive production. (Except at Tesla, where that seems up in the air. More on that later today.)

The New York Times has more on what this means for plant workers:

“This is another big blow to the economy,” said Patrick Anderson, president of Anderson Economic Group in East Lansing, Mich.

Although some autoworkers will be eligible for sick pay, many will get only a portion of their income and others will have to rely on unemployment insurance.

“This is going to mean a significant loss in income,” Mr. Anderson said. “Workers are really going to be hurt if there’s not some kind of sustained program to help them.”

Ford, which has 55,000 U.A.W. employees, said those with at least one year of service would receive 75 percent of their regular pay through a combination of unemployment benefits and supplements paid by the company. G.M. is discussing a similar plan with the U.A.W., a company spokesman said.

The scope of this shutdown, temporary as it may be, cannot be overstated. Here's The Detroit News on what it means:

This is historic and unprecedented, and not in a good way. It's the functional equivalent of a strike against all three companies in the three countries of North America. As a practical matter, the temporary shutdown wouldn't have occurred unless all three companies agreed to stop production roughly until the end of the month — and when they'll restart will be carefully evaluated.

That'll be tricky, giving new meaning to the ol' labor-management saying that it's easier to take the folks out than to get them back. Where will the state-by-state case numbers be by March 30? Or, worse, the death toll? And as long as automakers are not producing, and dealers are not ordering more vehicles, a lot of revenue will not be coming in.

We'll be playing catch up on this for a very long time. 

Ford Suspends 2020 Guidance, Borrows Billions

Unlike the airline industry, the automakers aren't asking for a bailout—at least not yet, and hopefully not ever. But Automotive News reports Ford is suspending its previous 2020 financial outlook and tapping a significant line of credit as it temporarily winds down car production. 

The automaker also said it will borrow the total unused amounts against two lines of credit: $13.4 billion under its corporate credit facility and $2 billion under its supplemental credit facility.

Ford said the money from these borrowings will be used to offset the temporary working capital impacts of the coronavirus-related production shut downs and to preserve Ford’s financial flexibility. Ford said earlier this week it would idle all North American plants until March 30, and also announced plant closures in continental Europe.

“Like we did in the Great Recession, Ford is managing through the coronavirus crisis in a way that safeguards our business, our workforce, our customers and our dealers during this vital period,” Ford CEO Jim Hackett said in a statement.  “As America’s largest producer of vehicles and largest employer of autoworkers, we plan to emerge from this crisis as a stronger company that can be an engine for the recovery of the economy moving forward.”

Very exciting that we're already using "like we did in the Great Recession" here. This is going to be a fun few months. And by fun, I mean nightmarish. 

Uber Wants To Deliver Coronavirus Tests

There doesn't seem to be a timeline on this yet, but Uber—which dabbles in the delivery business—says it wants to help get more coronavirus tests out to the general public. Test shortages have especially been a problem in the U.S., where we lag behind many other countries who are also working to combat the outbreak. Via Business Insider:

Uber said Thursday it is "looking to deliver" coronavirus tests and is working with health officials in order to do so.

Chief executive Dara Khosrowshahi broke the news in a conference call with analysts in which it updated them on the company's slumping business as coronavirus forces many businesses to close, travelers to stay put, and other potential riders to stay home.

An Uber spokesperson confirmed the company was looking into the possibility, but that no deliveries had yet begun. There's no word on where the tests might be delivered first, or if they will be delivered to homes, hospitals, testing sites, or other locations.

As you might guess, consumer spending on rides from Uber and Lyft are down significantly in the U.S. (and other places too, most likely) as a result of social distancing and quarantine efforts. The Wall Street Journal reports spending is down about 20 percent for both services this past week compared to the previous one. 

Since the financial situations of both companies are pretty precarious to begin with, one wonders if they can survive a prolonged decline in rides. Or maybe they'll just find a way to keep sucking up more investor cash. They're good at that.

On Our Radar

Mercedes-Benz plant in Ala. likely to idle amid parts shortage (Automotive News)

Coronavirus highlights strengths of self-driving delivery vehicles (CNET Roadshow)

Harley-Davidson faces proxy fight with investor Impala (Reuters)

Read These To Seem Smart And Interesting

A novel take on what to do with abandoned malls (Curbed)

How Social Distancing Became Social Justice (Wired)

Don’t Give the Airlines What They Want (Vice)

Playboy Magazine Shuts Down Print Edition, Citing Coronavirus (WSJ)

Your Turn

What happens next with automotive production in the U.S.? And what long-term effects will a production halt have?