Wow, when was the last time this ever happened?
At the urging of UAW leaders, all three of Detroit’s “Big 3” automakers announced around midday on Wednesday that they would shutter all domestic production. The decision follows Daimler, BMW and a handful of other car makers in Europe and Asia shuttering factories to combat the coronavirus outbreak – and to prevent a glut of supply.
Here’s the rest of the update, courtesy of the AP:
Detroit’s three automakers have agreed to close all of their factories due to worker fears about the coronavirus, two people briefed on the matter said Wednesday.
Automakers are expected to release details of the closure later in the day. The United Auto Workers union has been pushing for factories to close because workers are fearful of coming into contact with the virus.
The people didn’t want to be identified because the closures have not been formally announced.
The decision reverses a deal worked out late Tuesday in which the automakers would cancel some shifts so they could thoroughly cleanse equipment and buildings, but keep factories open. But workers, especially at some Fiat Chrysler factories, were still fearful and were pressuring the union to seek full closures.
Fiat Chrysler temporarily closed a factory in Sterling Heights, Michigan, north of Detroit after workers were concerned about the virus. The company said a plant worker tested positive for the coronavirus but had not been to work in over a week. One shift was sent home Tuesday night and the plant was cleaned. But that apparently didn’t satisfy workers, and two more shifts were canceled on Wednesday.
Under an agreement reached with the union, companies will monitor the situation weekly to decide if the plants can reopen, one of the people said.
Honda is also planning on closing its North American factories, the company said.
Honda Motor Co. announced Wednesday that it will temporarily close its North American factories for about one week starting on Monday.
The move by General Motors, Fiat Chrysler and Ford will idle about 150,000 auto workers. They likely will receive supplemental pay in addition to state unemployment benefits. The two checks combined will about equal what the workers normally make.
Automakers have resisted closing factories largely because they book revenue when vehicles are shipped from factories to dealerships. So without production, revenue dries up. Each company has other reasons to stay open as well. Ford, for instance, is building up F-150 pickup inventory because its plants will have to go out of service later this year to be retooled for an all-new model.
As the story explains, factories are typically reluctant to close factories since these companies book revenue when they ship vehicles, not when they’re sold – so it’s all gravy to them.