Detroit: Defying a wave of layoffs that has sent the U.S. job market into its worst catastrophe on record, at least one major industry is making a comeback: Tens of thousands of auto workers are returning to factories that have been shuttered since mid-March due to fears of spreading the coronavirus.
Until now, it was mostly hair salons, restaurants, tattoo parlors and other small businesses reopening in some parts of the country. But the auto industry is among the first major sectors of the economy to restart its engine.
With it comes about 133,000 U.S. workers pouring back into assembly plants that will open in the coming week, or just over half of the industry’s workforce before the pandemic, according to estimates by The Associated Press. In addition, parts-making companies began cranking this week to get components flowing, adding thousands more workers.
Looming in the background is an economy decimated by the pandemic. Nearly 3 million laid-off workers applied for unemployment benefits last week, raising the total seeking aid to about 36 million. Although some states have begun to let selected businesses reopen, workers are still reporting difficulty getting unemployment benefits. Freelance, gig and self-employed workers are struggling.
Even the auto sector won’t see a full return to normal yet, and if people don’t start buying vehicles again, the workers could be sent home. Yet automakers say there’s enough pent-up demand, especially for pickup trucks, to get factories humming again.
That could help states slow the drain on their unemployment benefit funds. In Michigan, where over one-third of the labor force sought benefits, the fund fell from $4.6 billion before the pandemic to $4.1 billion on April 30, said Jeff Donofrio, director of the state Department of Labor and Economic Opportunity. Some returning auto employees could work part-time and get still some unemployment benefits, but federal programs could cover part of their payments, he said.
Things are worse in Europe, where sales plummeted 55% in March and some factories are running only at 40% of capacity.
The pandemic has affected over 1.1 million European auto industry workers, almost half the sector’s manufacturing jobs.
Most are getting paid through government support.
A survey of auto parts suppliers shows that a third of executives believe it will take at least two years for the industry to recover.
U.S. sales fell 46% in April as the virus took hold, but analysts are forecasting a smaller decline of 30% in May.
Sales have been juiced by huge incentives, with some automakers offering 0% financing for as long as seven years.
Pickup trucks are giving automakers the most hope, said Jeff Schuster, senior vice president at LMC Automotive, a consulting firm.
Through April, total auto sales were down 21%, but pickups were only off 4%, he said.
Yet Schuster says automakers could be a little too optimistic about sales overall. “Those consumers who are still unemployed are not likely to be making auto purchases,” he said.
Some U.S. automakers, like General Motors, are restarting slowly, only bringing back workers on one shift in factories, some of which ran around the clock before the pandemic. Others, like Subaru in Indiana, have a full complement of employees.
Although companies are taking precautions, one big virus outbreak at an auto plant could send the industry back into hibernation.
And the industry could face parts supply interruptions from Mexico, where the government wants to reopen factories despite rising virus cases.
Automakers in the U.S. are requiring employees to fill out questionnaires daily to see if they have symptoms, they’re taking temperatures with no-touch thermometers before workers enter buildings, and they’re requiring gloves, masks and face shields.
They’ve also tried to keep at least six feet between workers, staggered time between shifts so workers don’t interact, and have put up plexiglas barriers when possible.
All the steps were tested on U.S. workers who volunteered to make protective gear and breathing machines while they were laid off. Automakers say they know of no virus cases among workers in the effort.
Source: Bahrain News Agency