Several auto firms to cease N American production amid coronavirus

Author: Adam Yanelli

2020/03/18

HOUSTON (ICIS)--Several automakers, including the US Big Three, will halt production until the end of March across North America because of the outbreak of the coronavirus (Covid-19).

Ford Motor, General Motors (GM) and Fiat Chrysler Automobiles (FCA) announced the actions on Wednesday, after the United Auto Workers (UAW) union expressed concerns after an employee at a GM facility in Warren, Michigan tested positive for the coronavirus.

Ford will halt production at its plants in the US, Canada and Mexico after Thursday evening's shift to 30 March in order to thoroughly clean and sanitise the company’s plants, according to a release from the company.

GM said in a release that it is beginning a systematic, orderly shutdown of North American operations to deep clean facilities, and that production status will be reevaluated weekly after 30 March.

FCA will cease production progressively from Wednesday through the end of the month. The company said in a release that tit will reevaluate at the end of the month.

Honda announced in a release it will suspend production for six days beginning 23 March, with current plans to return to production on 31 March.

Honda transmission and engine plants in North America that serve the company's auto plants also will suspend production for the same period. Honda will reduce production by approximately 40,000 vehicles during these six days.

Fiat Chrysler Automobiles (FCA) had not made an announcement but was expected to follow with similar actions, according to market sources.

The action will have a big impact on the US economy as so many other industries supply the auto manufacturers, said Kevin Swift, chief economist of the American Chemistry Council (ACC).

“The light vehicle industry is central to the economy,” he said.

The UAW expressed concerns to the top US automakers on Tuesday after an employee at a GM facility in Warren, Michigan tested positive for the coronavirus, which resulted in the formation of a joint coronavirus task force.

The UAW did not reply to telephone calls and emails seeking comment.

In addition to adjusting vehicle production plans, the joint task force will also focus on additional social distancing, break and cleaning schedules, health and safety education, health screening, food service and any other areas that have the potential to improve protections for employees.

German auto manufacturer Volkswagen Group (VW) announced it is shutting down most of its automobile production in Europe on the back of the coronavirus pandemic.

The automotive industry is a major global consumer of petrochemicals which contributes more than a third of the raw material costs of an average vehicle, and production disruptions could severely weigh on demand.

According to ICIS, chemicals with a significant percentage of their global demand tied to the automotive industry include nylon resins, styrene-butadiene-rubber (SBR), polypropylene (PP), acrylonitrile-butadiene-styrene (ABS), polymethyl methacrylate (PMMA) and polycarbonate (PC).

(recasts with FCA announcement and updates throughout)

Focus story by Adam Yanelli
Thumbnail image by Divyakant Solanki/EPA/Shutterstock
Visit the ICIS coronavirus topic page for analysis of the impact on chemical markets and links to latest news.