The coronavirus threatens auto industry recovery as cases rise and more employees miss work

Business

United Auto Workers members leave the Fiat Chrysler Automobiles Warren Truck Plant after the first work shift, Monday, May 18, 2020, in Warren, Mich.

Paul Sancya | AP

Ford Motor and Fiat Chrysler are hiring temp workers and General Motors is restructuring shifts at an assembly plant in Missouri as the auto industry battles to keep factories running amid high absenteeism rates.

So many employees are missing work that it’s causing issues on production lines at plants in states such as Michigan, Missouri and Kentucky where Covid-19 cases are surging. It’s not just employees who are sick with the coronavirus. Many employees on sick leave are perfectly healthy, but they’ve been exposed to the virus and are missing work because they have to self-quarantine for 14 days.

Another full or partial shutdown of plants would be devastating to the industry as automakers try to restock dealer lots and recoup some of their losses following a roughly eight-week shutdown from March to mid-May.

“It’s incredibly damaging to the economy and to the industry and to the companies to shut down again,” said Kristin Dziczek, vice president of Industry, Labor & Economics at the Center for Automotive Research in Ann Arbor, Michigan.

U.S.-based automakers, including Tesla, are trying to keep plants running as smoothly as possible and address worker concerns about the virus spreading in the plants and their surrounding areas. 

GM

In Missouri, where GM produces its popular Chevrolet and GMC midsize pickups and vans, the state hit a record 1,092 new cases Tuesday, up from 292 new cases reported on July 1, according to data compiled by Johns Hopkins University. St. Charles County, where the plant is located, is fifth in the state for the amount of reported cases. 

GM has had to shuffle around its staffing schedule to accommodate all the people out on sick leave, spokesman Dan Flores said. The company had planned to cut a third shift in Missouri starting next week, furloughing some employees and reassigning others to the other two shifts at the facility, which employs 3,800 hourly workers. It then figured a way around that, declining to say exactly how they will avoid cutting jobs.

“Even with very effective safety protocols in place, it has been a challenge to accommodate people who are not reporting to work due to concerns about COVID-19 in the community and keep our Wentzville plant operating at full capacity,” Flores said Thursday in an email. “But the team worked very hard on a new staffing plan that will keep everyone working and hopefully avoid the need to lay-off the third shift.”

Automakers typically use workers from other plants, increase overtime or hire additional temporary workers to address staff shortages. 

The Detroit automaker believes workers at its plants shouldn’t “be concerned about coming to work” because the company has implemented new procedures to keep everyone as safe as possible, according to Flores. 

GM is urging its employees to follow the same protocols whether at work or at home, including social distancing and wearing masks when they’re in groups. The Detroit automaker as well as its crosstown rivals have implemented temperature checks and Covid-19 testing procedures, among other safety measures.

Ford, Fiat Chrysler

Ford and Fiat Chrysler are hiring temporary workers to cover for employees who are sick or under quarantine, company officials said. Automakers regularly use temporary workers to fill in for vacations or to support a production ramp-up or new product launch.

In Kentucky, where Ford operates two large assembly plants, including a large truck plant, the automaker has hired more than 1,000 temporary workers to fill in for absences at its plants, according to Todd Dunn, president of the local United Auto Workers chapter representing the area’s employees.

“We’re working on remaining safe inside the plants,” he said Monday. “The Covid cases are going up.”

A worker builds a Ford Expedition SUV as it goes through the assembly line at the Ford Kentucky Truck Plant in Louisville, Kentucky.

Getty Images

Kentucky reported 977 new cases — its highest daily total — on Sunday. It’s seven-day average of new cases also hit a new high at 548 on Tuesday, up from 170 a month earlier. 

Ford spokeswoman Kelli Felker said the company has hired above its normal level of temporary workers for this time of year but declined to release a total number.

Dunn called the workers who continue to work “true patriots,” specifically citing the company’s truck plant in Kentucky being critical to Ford’s profitability. He said more than a dozen workers have tested positive at the plants.

“It’s not all sugar and spice,” Dunn said. “It creates issues, problems and situations that you have to be overcome. Not all of them are easy.”

Fiat Chrysler has been experiencing “slightly higher” absenteeism than before the pandemic, according to spokeswoman Jodi Tinson. She said the company continues to hire new employees and remains “very pleased” with the restart of its production.

The Detroit automakers and United Auto Workers union declined to comment on the number of employees who have tested positive for Covid-19. The union earlier this year confirmed more than two dozen employees had died from the disease.

Ripple-effect

One of the biggest threats to the U.S. automotive industry would be if Michigan were to once again shut down factories, according to industry officials. The state is home to roughly a dozen large assembly plants and more than 1,600 supporting manufacturing facilities.

“We’re very integrated with other states’ and countries’ production,” Dziczek said. “Just taking one state out would impact production elsewhere.”

If Michigan were to roll back its factory reopenings, it would likely impact other states. It also would create even greater tension between the Democratic governor and President Donald Trump. The two have been at odds over several issues since the pandemic began.

Michigan Governor Gretchen Whitmer wears a face mask as she arrives to address the media about the flooding along the Tittabawassee River, after several dams breached, in downtown Midland, Michigan U.S., May 20, 2020.

Rebecca Cook | Reuters

Michigan Gov. Gretchen Whitmer last week threatened to shut auto plants again if residents don’t obey a mandatory mask order as Covid-19 cases rise in the Great Lakes State.

The state is experiencing its second wave of Covid-19 cases after reporting nearly 2,000 new cases a day in early-April. The state’s seven-day average of new cases as of Monday was 742, up from 244 a month earlier.

Tesla

Automakers, including Tesla, argue implemented safety protocols are keeping employees safe at work, but they can’t control what employees do once they leave the factories or the rising amount of cases where the factories are located.

Tesla’s vice president of Environment, Health and Safety, Laurie Shelby, sent an e-mail to all Tesla employees on July 15th downplaying Covid-19 exposure risk at work and blaming the majority of infections among Tesla’s employees on exposure outside of work.

“Most of the positive cases resulted from an individual living with or traveling with someone with Covid-19 and have returned to work after recovering from home,” she told employees. “To beat this pandemic, we must all remember what we do off work impacts what we do at work.”

An aerial view of the Tesla Fremont Factory on May 13, 2020 in Fremont, California.

Justin Sullivan | Getty Images

The company didn’t tell employees how it determined where their Covid-19 infections among its approximately 55,000 employees originated. Tesla did not respond for comment.

California, which was previously praised for containing its outbreak, is once again a coronavirus hotspot. Gov. Gavin Newsom said Wednesday that the state hit another record number of cases the day before with 12,800 new infections.

“People continue to mix and people continue to come in close contact with others that may have contracted this disease that our numbers would start to go up in total now,” Newsom said.

– CNBC’s Lora Kolodny contributed to this report. 

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