Coronavirus starts to take a major toll on automakers, with thousands of jobs at risk

For every week that consumers stop buying new vehicles, the U.S. would lose roughly 94,400 jobs and $7.3 billion in overall earnings, according to one projection.
The Cassino Assembly Plant FCA Group
An employee works on the Alfa Romeo Giulia assembly line in the Cassino Assembly Plant FCA Group in Cassino, Italy.Stefano Montesi / Corbis via Getty Images

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By Paul A. Eisenstein

Most white-collar auto industry employees by Fiat Chrysler, Ford and General Motors are working from home this week, but Detroit’s Big 3 have formed a task force with the United Auto Workers Union to see if there’s a way also to protect hourly workers from the coronavirus without shutting down their U.S. parts and assembly lines.

With schools closed, major sports leagues suspending their seasons, large gatherings being canceled and the travel industry in freefall, automotive analysts are downgrading their 2020 sales forecasts. Morgan Stanley now anticipates U.S. demand for new cars will plunge to 15.5 million, down from last year’s 17.1 million vehicles.

There are a few, faint bright spots. Toyota, for one, reopened one of its Chinese plants in Guangzhou. But, at both the global and U.S. level, there are plenty of reasons why automakers are growing increasingly glum.

Fiat Chrysler Automobiles last week became the first automaker to confirm that an employee had a case of COVID-19. The salaried worker at the Kokomo (Indiana) Transmission Plant is now receiving medical care, while an undisclosed number of other workers who had contact with that employee have been quarantined.

Fiat also temporarily closed some of its plants in its home Italian market, including factories in Pomigliano d'Arco, Melfi, Atessa and Cassino. Together, those facilities produce about 600,000 vehicles annually, or about 4 percent of total European output.

Volkswagen is shutting down most of its European assembly plants for two weeks as the coronavirus epidemic spreads across the continent, the automaker announced Tuesday. The German automaker said it will close operations for 14 days at most of the rest of its European factories after the last shift this coming Friday, CEO Herbert Diess said.

In China, where the coronavirus epidemic began, government officials have signaled that new cases of the disease may be declining. Automakers initially closed scores of plants in late January and early February, but have begun reopening many of them.

“Companies are starting up operations but they are far from full strength. Still, millions of migrant laborers are making their way back to work, passing through quarantine procedures," Michael Dunne, founder of automotive consulting firm ZoZo Go, told NBC News.

How soon things will be back to normal at Chinese auto plants is far from clear. So far, shutdowns and slowdowns have forced closures of Hyundai plants in South Korea due to that automaker’s heavy dependence upon Chinese parts suppliers. In the U.S., manufacturers had been relying on industry backlogs to minimize the impact, but that may no longer be possible, several experts have warned.

A number of auto shows – which historically help build excitement among potential buyers – are being canceled or delayed. This month’s Geneva International Motor Show was scrubbed for the first time in its 90-year history. The Beijing Motor Show is being indefinitely postponed and the New York International Auto Show will be pushed back from April to August. It remains uncertain whether the North American International Auto Show in Detroit will go ahead as planned. This year it was set to move from its normal January date to June.

“There’s no telling how widespread or long lasting the ripple effect of the coronavirus will be for the automotive industry,” said Chris Sutton, a vice president with J.D. Power and Associates.

The loss of a single week of auto sales in the U.S. as a result of the spread of the novel coronavirus could have staggering ripple effects on the broader economy, according to data from the Center for Automotive Research in Ann Arbor, Michigan.

For every seven-day period that consumers stop buying new vehicles, the U.S. economy would lose roughly 94,400 jobs and $7.3 billion in overall earnings, CAR projected.