US Automakers in Discussions to Reopen Plants, Report Says

After a month or more of downtime, automakers in the U.S. are in discussions with the United Auto Workers to resume production after a number of European automakers have restarted assembly plants. Volkswagen is in the process of restarting its plants in Germany and Slovakia this week, with plans in other countries to follow on Monday of next week, while in the U.S. the UAW union is negotiating with automakers about resuming work, Reuters reports.

The UAW is in talks with the Detroit Three automakers over safety practices and sick leave policies for its workers, amid plans by U.S.-based automakers to resume production sometime in early May. The union is focused on achieving terms allowing workers to stay home and self-quarantine if they aren’t feeling well, in addition to being provided masks and face shields while at work, Reuters notes. Several UAW leaders suggest plant re-openings depend on having enough personal protective equipment, or PPE.

When shutdowns of union plants in the U.S. were implemented in mid-March, the plan was to resume production by March 31. But the accelerating pandemic in the U.S., as well as orders by several state governors for residents to stay in their homes, has significantly pushed back automakers’ plans to resume production.

Restarting production itself is only one part of U.S. auto commerce: Dealerships have to be open, and demand has to be there, as well.

The demand part has automakers making plans for a great reduction in sales for the rest of the year, which is why several automakers in Europe are not in a hurry to resume production at the earliest date possible. Auto sales have fallen a bit more than 50% in Europe during March, with Italy seeing an 85.4% drop, Reuters notes. Automakers are expecting demand to remain depressed through the year, with some planning on selling roughly half of what they sold last year. Even this figure might turn out to be optimistic, making automakers wary of restarting May production at pre-outbreak levels.

Countries hit hard by the pandemic, including Spain, saw new car registrations drop 69.3%, while France experienced a 72.2% drop in March, Reuters reports.

Another important part of the equation is the infection and hospitalization rate caused by the coronavirus pandemic itself. With infections and deaths still growing steadily, what would be the objective standard or level of infection rate growth for the reopening of automaker and supplier plants, in addition to other types of businesses? For instance, is the number of reported infections in May expected to be sharply lower than at this point in April, when plants are still closed? Or earlier in March when the plants were first shuttered?

The point at which it is safe to resume work in plants is ultimately something individual states and the federal government will have to decide, with states lifting stay-at-home orders allowing auto workers to return to the plants.

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