Fiat Chrysler, Volkswagen Production in Europe Declines Amid Pandemic

Greetings and welcome to Speed Lines, The Drive’s morning digest of significant developments in the realm of transportation. Today, the prevailing issue that is likely to dominate discussion pertains to the ongoing global situation. Let’s delve straight into it.

Commencement of Decreased European Car Production

The outbreak of the coronavirus has brought the world to a standstill in a manner unprecedented in recent times. Presently, the impacts of the virus are predominantly felt in Italy, various European regions, and Iran. Numerous specialists caution that the U.S. is approaching a situation akin to that experienced by these aforementioned countries, as opposed to the recent occurrences in Asia.

In light of these circumstances, the European automotive sector is bracing itself for a profound blow, as entire nations enforce lockdowns, financial markets plummet, local enterprises cease operations, and numerous individuals fret over financial obligations. Fiat Chrysler is set to halt nearly all car manufacturing activities in Europe for a minimum of two weeks, as detailed by the Wall Street Journal:

The automaker has declared the closure of six Italian factories responsible for assembling Fiat, Jeep, Maserati, and Alfa Romeo vehicles. Additionally, factories in Poland and Serbia producing Fiats will cease operations. With approximately 65,000 employees across Europe, the company has not specified the exact number of workers affected by the closures.

Similar to other businesses in Italy and various European regions, Fiat Chrysler already has a significant portion of its office-based staff working remotely. Workers unable to attend due to factory shutdowns will receive a substantial portion of their wages via predominantly government-funded schemes aimed at aiding struggling companies.

Previously, Fiat Chrysler temporarily suspended operations at its Serbian plant due to parts unavailability from China. However, the recent factory closures are not a result of parts shortages, according to a knowledgeable source. Certain smaller Italian plants producing components such as engines are being kept operational since they can readily comply with physical distancing requirements.

These measures are primarily driven by declining demand for new cars, as populations throughout Europe are instructed to adhere to lockdown measures.

Volkswagen, the world’s largest automaker, is also embarking on production reductions in severely affected regions, particularly in countries like Italy. As per Bloomberg:

The renowned automaker has indicated that the repercussions of production halts, including those in Spain and at its Lamborghini facility in Italy, are beginning to impact other sites such as its U.S. plant in Chattanooga, Tennessee. Earlier the same day, Fiat Chrysler announced the suspension of European production by its Italian division and the Maserati brand.

Several European nations, including Germany, have tightened border controls to curb the coronavirus spread, albeit maintaining unhindered movement of goods. Internal mobility restrictions have been imposed by governments across Europe, with numerous employees opting to work remotely, thereby decelerating productivity.

In Volkswagen-related news, its Chattanooga facility in the U.S. will undergo temporary closure for extensive cleaning and to facilitate employees in arranging child care during a two-week school closure in the vicinity. Presently, the facility is operational, alongside several other automotive plants in the U.S. It is probable that we will witness changes in this scenario within the next week or so.

Status in the United States

While American automotive plants have yet to cease operations, administrative staff at major manufacturers,Have received instructions to work remotely. At present, this directive doesn’t impact the hourly workers at the automobile factories, who are diligently producing new automobiles that will probably continue until the very last moment.

What kind of safeguards will be implemented for those individuals? As The Detroit Free Press details, the United Auto Workers union and the car manufacturers have established a collaborative group (on a side note, I dislike the term “task force,” but that’s not the main point currently) to jointly devise new safety regulations and deliver updates to employees. According to the article:

The automakers mentioned, “The coronavirus is an evolving and unparalleled circumstance.” Therefore, the collaborative group will promptly enhance the existing preventative measures, as indicated by them.

The companies and the UAW are working together to forestall the spread of coronavirus through the following actions, according to their statement.

Enhanced visitor screening.
Elevated cleaning and sanitizing of communal areas and points of contact.
The companies will establish safety procedures for individuals with potential exposure and those displaying flu-like symptoms.

The primary domains of focus for the collaborative group will encompass:

Production plans for vehicles
Additional measures for social distancing
Break schedules and cleaning protocols
Educational programs on health and safety
Screening for health and provision of food services.

Once the collaborative group identifies enhancements, every company along with the UAW will issue regular updates to the employees, according to an official statement.

Airlines Also Impacted Severely

Even after the conclusion of this outbreak, we will still be contending with the enduring economic repercussions of this calamity. Consider the airline industry, for instance. Virtually all airline companies are grounding aircraft, significantly reducing services until early summer, and trimming executive salaries. Delta is enacting its most extensive flight capacity reduction in history, surpassing even the aftermath of the September 11 attacks in 2001. American Airlines is halting 75 percent of its long-haul international flights.

United Airlines has informed its staff members that they should brace themselves for imminent layoffs. As reported by Business Insider:

United Airlines intends to slash its flight capacity by approximately half in April and May, with CEO Oscar Munoz and President Scott Kirby notifying employees in a communication to anticipate the ripple effects of COVID-19 to extend into the summer season.

While March is typically a bustling month for airlines, the pair of executives remarked that over one million fewer passengers boarded United flights in March 2020 compared to the previous year, resulting in an anticipated year-over-year revenue decline of $1.5 billion.

Despite March typically signaling the commencement of the summer season for airlines, United anticipates no discernible upswing, expecting a reduction in demand of 20-30% on its flights over the next two months, with the possibility of these extremely light loads persisting into the summer season.

Moving away from the automotive sector for a moment, many are pondering how the airline industry will endure this pandemic.