Ford Won't Restart Car Production in April After All

Today on Speed Lines: Ford is busy working on ventilators, but cars will have to wait. 

Chicago Assembly and Stamping
CHICAGO, IL. Feb. 7, 2019 – Tommy Brosius (left) and Dennis Jones , Ford employees, train to assemble engines for the all-new 2020 Ford Explorer. Ford is investing $1 billion in Chicago Assembly and Stamping Plants and adding 500 jobs to expand capacity for the production of all-new Ford Explorer, Police Interceptor Utility and Lincoln Aviator. The new investments include advanced manufacturing technologies and workforce training at the plants to help Ford deliver better quality vehicles to customers more quickly. The company spending $40 million to make the Chicago Assembly and Stamping better places to work, including new LED lighting and cafeteria updates, new break areas, and parking lot security upgrades. Photo by: Sam VarnHagen

Welcome back to Speed Lines, The Drive's morning roundup of what matters most in the world of transportation. Today we're talking about Ford, the gig economy in the time of coronavirus and the terms of the airline bailout. It's only Tuesday

Ford Postpones April Production Restart

Some of Ford's workers are headed back to the assembly lines to build ventilators for America's war on the coronavirus outbreak, but car production won't get back on track so quickly. A mere five days after saying it would restart its Mexico plant on April 6 and some U.S. plants mid-month, Ford announced today that it will indefinitely delay production with no new start date in mind.

Here's Automotive News:

"The health and safety of our workforce, dealers, customers, partners and communities remains our highest priority," Kumar Galhotra, Ford president, North America, said in a statement. "We are working very closely with union leaders -- especially at the UAW -- to develop additional health and safety procedures aimed at helping keep our workforce safe and healthy."

Two UAW-Ford workers have died from the virus since Ford announced its April restart target. One employee worked at Dearborn Stamping, one of the plants previously targeted to reopen April 14, while another was a skilled trades member at the Ford Data Center in Dearborn, Mich.

"Today's decision by Ford is the right decision for our members, their families and our nation," UAW President Rory Gamble said in the Ford 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."

Other automakers also announced mid-April restart dates, but I'm fully expecting them to scuttle those plans soon. Is Ford doing the right thing here? Yes, absolutely. What's the alternative? Even the White House, which is eager to get the economy back on track, has dashed tentative plans to get the country moving again by Easter. Now, it looks like social distancing will last until April 30, at least—possibly longer.

Everyone is suffering with the country's economy effectively on pause, but getting car production going again just isn't an option for now. 

Gig Workers Fight Back

On yesterday's Speed Lines, I argued that our pending economic downturn—terrifying as it is—may mark the end of the cheap, readily available capital to smart-sounding startups with no real path to profitability. The second component to that is that the gig workers of the tech world, including people like drivers for Uber and Lyft, are starting to push back hard against pay inequality and crushing working conditions.

Shoppers for Instacart and Amazon warehouse workers went on strike yesterday over their low wages and the company's alleged lack of protection against the virus. And as Wired's Aarian Marshall reports, the Uber and Lyft drivers who are already suffering from lack of work are fighting against their controversial independent contractor status:

In California, the effort has focused on enforcing Assembly Bill 5, a state law implemented this year that limits companies’ ability to classify workers as contractors. In two separate cases, an Uber driver and a Lyft driver last week asked federal judges to intervene in enforcing AB 5 and force the companies to treat their drivers as employees.

“Uber’s and Lyft’s failure to provide for their employees has been exacerbating the coronavirus crisis,” says Shannon Liss-Riordan, the attorney representing the drivers in both lawsuits. The emergency motions have been fast-tracked by the courts.

[...] Rideshare Drivers United, a Los Angeles-based group that represents some 12,000 drivers, is pushing drivers to submit wage claims to the California Labor Commission, arguing that the ride-hail companies have “misclassified” workers who should be able to recoup expenses and back pay. Using similar reasoning, the group is urging drivers to appeal unemployment claims that were denied before the new federal law was enacted.

Society's fault lines feel wider than ever in a crisis like the one we're in now. 

Let's Check In On The Airlines Though

Speaking of sending help to those who need it most, let's see what's going on with the airline bailout. (That was sarcasm.) Here's Business Insider on the strings that come with that industry's $60 billion aid package:

Airlines receiving aid will also be prohibited from buying back shares of their own stock for a year after the loan is fully paid off and bars them from issuing dividends to shareholders while receiving aid. This provision can be waived by the Treasury Secretary if deemed "necessary to protect the interests of the Federal Government," though the secretary would be required to testify before the House and Senate in such a case.

Executive compensation for any airline receiving aid is capped at 2019 levels. CEOs of the major US airlines earned between $10 million and $15 million in total compensation in 2018. Figures for 2019 are not yet publicly available.

Under the terms of the loan portion of the bill, the government would take an equity interest in the companies until the loan is paid back — something that Boeing CEO David Calhoun has previously said the company would not want to accept.

Stock buybacks were a hugely controversial part of this bailout package, as the airlines spent most of their free cash over the past 10 years buying back shares instead of hoarding money for the very rainy day we're in now. It's great that these companies are prohibited from doing so now. 

On Our Radar

Penske Automotive to cut executive pay, furlough employees, postpone capital expenditures (Automotive News)

China sales seen picking up after coronavirus blow: Volkswagen (Reuters)

Global Stocks on Track for Worst Quarter Since 2008 (WSJ)

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Your Turn

Given that the U.S. social distancing guidelines will now extend to April 30, when do you conceivably see car production starting up again?