Big auto manufacturing restart proves elusive as suppliers wrestle with restrictions, safety worries
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April 27, 2020 12:00 AM

Big restart proves elusive as suppliers wrestle with restrictions, safety worries

Alexa St. John
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    Lear Corp. CEO Ray Scott is thinking about how plants, including his own, above, will need to change to permit the auto industry to return to work.

    For one fleeting moment last week, it looked as if the North American auto industry was about to come back to life.

    It did not.

    Tesla, eager to recapture its recent sales momentum, attempted to restart its U.S. supply chain of Midwestern parts makers, including a Faurecia injection molding plant in Saline, Mich., 50 miles from Detroit.

    But in a scenario that captures just how confounding and dangerous the global COVID-19 crisis is, Faurecia's factory workers balked at being called back, saying it appeared to some of them that they were being pressed into action despite unanswered questions about their safety from the coronavirus upon returning to plants.

    "None of us wants to go back because we think that it's not safe yet," a Faurecia plant employee who asked to remain anonymous told Automotive News. "We don't want to be the guinea pigs."

    It is the supreme question of the moment.

    Parts manufacturers, automakers, truckers and materials producers are desperately eager to resume building cars and trucks. But given the industry's complicated network of companies and vendors sprawled across the continent — and around the world — how?

    "I don't think there's answers for all the questions that are out there right now," said Ray Scott, CEO of Lear Corp., the automotive seating and electronics supplier with 2019 sales of $19.8 billion and 161,000 employees worldwide.

    "You know, even though we feel that we can create the safest environment, no one is absolutely 100 percent protected if we don't follow the protocols and adjust," Scott said during an Automotive News podcast last week. "We have to create different situations and protocols within those facilities. And in some cases, that may require us thinking about our plant layout. ... That may require an enormous amount of protective equipment and different policies and practices within those plants."

    Early May?

    The issue heated up last week as automakers grappled with the widespread hope of resuming production in the early days of May.

    Faurecia's restart of production for Tesla would have begun even earlier — on Monday, April 27, according to a company document obtained by Automotive News.

    Industry leaders weighed in with different degrees of caution and skepticism.

    UAW President Rory Gamble said in a statement the union opposes an early May restart of U.S. assembly plants.

    The union "does not believe the scientific data is conclusive that it is safe to have our members back in the workplace," Gamble said. "We have not done enough testing to really understand the threat our members face."

    Echoing his words was Julie Fream, CEO of the Original Equipment Suppliers Association, which represents suppliers across North America.

    "I don't want people to underestimate the challenge that is in this. To do this and put the appropriate health and safety protocols in place — that's what's going to dictate this slow ramp-up," Fream said. "My sense is the first few days — if not even weeks — of production will be much slower."

    Realistic challenges

    Automakers themselves wavered on the timetable.

    Honda Motor Co. — which builds vehicles in Alabama, Indiana, Ohio and the Canadian province of Ontario — last week extended its shutdown through May 8, one week later than it previously planned.

    Ford has remained noncommittal about precisely when it will attempt to restart its plants and supply chains, and General Motors said no decisions have been made.

    But according to one Detroit press report last week, GM sent an alert to employees Thursday, April 23, saying it will need some workers — mostly salaried — to begin helping to ready its manufacturing plants starting Monday.

    Betts: Wishful thinking by some

    Doug Betts, who has worked in manufacturing and quality posts at Chrysler, Toyota, Nissan and Michelin and is now president of J.D. Power's automotive division, suggests there is some degree of wishful thinking going through the industry.

    "There's some small suppliers that don't have those resources available," Betts said during a podcast with Automotive News last week, referring to the challenge of coming back online while also accounting for new health and safety issues.

    Betts said he believes it will take weeks longer than imagined to begin filling up the industry's pipeline of parts.

    "There's still a four-week gap on the ocean for parts coming from China when they start back up," he said, referring to China's multiweek economic interruption. "That has to be dealt with, and it's pretty broad.

    "You have your local suppliers that may be shut down," he added. "There were trucks on the road — you probably exhausted those, and so you've got to refill that."

    There also is the issue of having supplier plants in different states that have different shelter-in-place orders, he said.

    "The factories in Tennessee don't build cars out of parts that only come from Tennessee," Betts said. "So if the other states that feed those factories don't issue guidelines that allow those factories to start up, then it's really not going to do any good to start an assembly plant in Tennessee if you can't get parts from Indiana."

    Such concerns arose last week as Faurecia workers fretted about returning to work.

    Michigan's current stay-at-home order keeps most public-facing businesses closed and prohibits public gatherings and travel to vacation destinations. While the order makes exceptions for transportation-related work, it doesn't explicitly endorse automotive manufacturing.

    John Walsh, CEO of the Michigan Manufacturers Association, said he has asked the governor to amend the order to deem manufacturing essential and allow automakers and suppliers to resume production.

    But on Friday, April 24, Gov. Gretchen Whitmer extended Michigan's stay-at-home order until May 15 and did not alter rules for the auto sector.

    In Alabama, Gov. Kay Ivey declared automotive production and supplier manufacturing facilities "essential businesses and operations." But other states, such as Ohio, have not specified automotive manufacturing as an essential business permitted to operate.

    This could create a bottleneck throughout the supply chain when the time to restart comes, experts say.

    At week's end, Toyota was planning to press ahead with a May 4 restart of its U.S. factory lines, said Sean Suggs, president of Toyota Motor Manufacturing Mississippi in Blue Springs, Miss. He said Toyota has some parts in hand and will gradually ease back to life, giving its suppliers time to do the same.

    "When we shut down," Suggs said, "we already had a minimum of about two days of production [parts and components] at the ready. So that inventory is still there for us."

    For the planned restart, "the suppliers won't have to rush parts to us immediately."

    Rethinking factories

    At Lear, CEO Scott is thinking broadly about how factories, including his own, will need to change to permit the auto industry to return to work.

    This month, after his management team compiled a 51-page guide for how Lear's plants will have to be operated to minimize the spread of the coronavirus, Scott ordered the document be made public.

    PHIL NUSSEL
    Faurecia workers balked at the idea of going back to work this week. “We don’t want to be the guinea pigs,” said one

    He said his motivation was to help the industry see the amount of work required to resume factory operations in the new era. But of particular concern, he said, is making sure Lear's own supply chain — numerous small Tier 2 and Tier 3 companies — are on the same page as they feed into Lear and Lear feeds into its automaker customers.

    Having a clear line of sight on those other companies "is going to be a challenge," he said.

    "I think time is a critical element here," Scott said. "As opposed to going and having to make sure that suppliers got the information, read the information, understood the information, let's just go public," he recalled saying of the guide.

    The document details appropriate social distancing measures for suppliers to implement among employees in manufacturing plants. It also includes information on educating employees on new work procedures and protocols for taking proactive health measures in plants, such as worker temperature checks.

    In the long term, the industry landscape is going to change, Scott said.

    "We have to be mindful of how things may look when we do emerge and this is behind us," he said. "I do think there will be changes in the market relative to consumer demand, customer preferences with features and those type of things."

    Michael Martinez, Hannah Lutz, Larry P. Vellequette and Crain's Detroit Business contributed to this report.

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