Automakers Plan To Restart North American Factories – But Cars Aren't First On The List

Ford Motor Company F, Fiat Chrysler Automobiles N.V. FCAU, Toyota Motor Corporation TM and Honda Motor Co., Ltd. HMC have all announced that they plan to reopen their plants in early or mid-April. Each company is hoping to start ramping up production as soon as possible in an effort to losses.

Last week, the world's biggest carmaker, Volkswagen VWAGY announced that it is burning approximately $2.2 billion each week. This represents approximately 40% of last year's average weekly revenues. That number is huge, especially when compared with average weekly revenues. If such large outflows are happening to the world's biggest car producer, other automakers are facing the same or even worse scenarios. Many large companies are already scrambling for additional credit in order to fortify their cash reserves. Volkswagen even called the European Central Bank to speed up its plan to buy commercial papers directly from companies. To sum up, when you see those numbers and hear such news, the reason to restart production becomes quite clear.

Plans Of Other Automakers

Ford announced that it plans to reopen five plants that produce Ford pickups, SUVs, vans and commercial trucks. All plants will include stronger safety measures in order to protect workers' health. However, the United Automotive Workers union has met the move with skepticism and concern.

Last week, UAW's President Rory Gamble announced that a Fiat Chrysler employee died of COVID-19. Soon after, the number of Chrysler's employees who passed away increased to four. As a result, Fiat Chrysler said that plants across the U.S. and Canada will remain closed until April 14.  Honda announced that it plans to resume production on April 7. Toyota said their plants will remain silent until April 20.

On the other side, GM informed its workers that it is extending temporary closures of its North American plants. Reopening dates were not mentioned. They explained that the situation is dynamic and that it can change on a weekly basis.

Automakers Racing To Come To The Rescue

U.S. automakers have a history of stepping up during times of conflict. Ford has built bomber airplanes and GM assault crafts during wartime. Both companies, along with Toyota and Tesla TSLA, have pledged to produce ventilators and other medical equipment until this crisis is over. 

But this sort of switch is by no means easy. Workers at an automobile plant are not specially trained for this production that also involves intellectual property rights, regulatory approvals, and safety considerations.

Even still, help is sorely needed. COVID-19 is getting momentum in the U.S., with daily new cases growing at an exponential rate. Since last Monday, the number of infected people has increased by 100,000, which means it has more than tripled in only seven days.

Given the unprecedented circumstances of this global health crisis, everything remains unclear. In the meantime, automakers are in a race against the clock if they want to help save lives.

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