GM’s Mexican headquarters. Like competitors, it has a network of operations south of the border.
Reversing course, Mexican government officials now say the country’s auto plants could open before the end of the month, as long as manufacturers have put adequate safety measures in place.
The government has released a series of contradictory announcements in recent days, at one point indicating plants would remain closed until June 1. The latest development comes as a relief to the auto industry as it removes the last major obstacle to restarting a tightly integrated North American manufacturing network.
Operations in the U.S. and Canada have slowly started to fire back up, Hyundai, Kia, Mercedes-Benz and Toyota already building cars and car parts again. Detroit’s Big Three, General Motors, Ford and Fiat Chrysler, are set to follow on Monday, May 18. The challenge will be to implement new health and safety protocols, a concern highlighted when FCA this week had to send home a team leader helping to prepare for the opening of a suburban Detroit plant after exhibiting symptoms of COVID-19, the disease caused by the coronavirus.
(GM says no new COVID-19 cases, expects U.S. production back to normal in four weeks.)
During the past three decades, North American manufacturing operations have become tightly interwound. Mexico, for example, provides the majority of wiring harnesses – a low cost but critical component – used on U.S. assembly lines. It also has become the sole base of production for a number of vehicles, such as the Audi Q5. Manufacturers, obviously, are eager to resume operations south of the border.
Nissan operates two major assembly complexes in Mexico, including this one in Aguas Calientes.
So, there was plenty of confusion and concern when the government’s official gazette posted a series of announcements this week that appeared to go in opposite directions. Initially, it suggested manufacturing could start reopening almost immediately. It then retracted that guidance and, on Thursday, reversed course, saying the shutdown would continue through June 1. The latest shift indicates that companies with clear and approved safety protocols in place can resume operations on May 18, according to the Reuters news service.
“If the process is concluded and approved before June 1, the relevant company or industry will be able to begin its operations,” according to the official publication, which also stressed the government would shut down companies again if it saw new health risks.
Major automakers have put together extensive playbooks to deal with the coronavirus pandemic. Ford, for example, will require workers to check in on a smartphone app before even reporting to work, then have their temperatures taken as they prepare to enter the plant. They then will be given personal protection gear and enter a factory where significant steps have been taken to maintain social distancing and cleanliness, the automaker said.
(Toyota cutting NA production by a third through October.)
Such measures appear to be working, at least according to General Motors which, earlier this week, told reporters it has not had a single reported case of COVID-19 among employees since starting to resume operations in China. That includes facilities in the U.S. retooled to produce masks, ventilators and other medical gear.
The Audi Q5 is now produced only at a plant in Mexico.
But the industry received a clear warning of how difficult it could be to operate in a pandemic when a worker helping prepare FCA’s Sterling Heights Assembly Plant near Detroit for reopening tested positive for the disease.
FCA confirmed the case but not a second one being reported by local Detroit TV station WXYZ. The plant previously suffered several cases of COVID-19 in March, forcing it to close even before the rest of the automaker’s North American operations in mid-March.
In an e-mail to workers, FCA said, “today we had an instance where one of our colleagues at our Sterling Heights Assembly plants was tested positive for COVID-19. I am pleased to say that our protocols worked as envisaged. The person was isolated and quarantined, more importantly our social distancing and personal protection equipment protocols were in full use.”
The e-mail made it clear that Fiat Chrysler plans to move ahead with the reopening of its U.S. production operations on Monday.
In all, about 150,000 FCA, GM and Ford workers will report back to their U.S. plants starting Monday, though automakers caution that it will take time to ramp up to anywhere near normal production levels.
(Honda reveals plan for restarting North American plants.)
As for Mexico, it remains unclear how soon that country’s industry will be fully reopened. But President Andres Manuel Lopez Obrador said during a news conference on Friday that he now expects the pandemic to begin easing up in his country, adding that, “We’re seeing the light at the end of the tunnel to return to the new reality.”