Mexico now says auto sector may operate before June 1 if safety measures in place

MEXICO CITY -- Mexico's auto industry can exit the coronavirus lockdown before June 1 if companies have approved safety measures in place, the government said on Friday, seeking to set the record straight after sending out confusing signals on the matter.

Announced in the government's official gazette, the instructions should allow companies to reconnect key supply chains between Mexico and the rest of North America, which depends considerably on parts made south of the U.S. border.

The directive refers to manufacturers of transportation equipment, as well as the mining and construction industries, all of which the government have designated essential and from May 18 can begin establishing security protocols.

"If the process is concluded and approved before June 1, the relevant company or industry will be able to begin its operations," the government said, noting that companies which put workers' health at risk would be shut down.

On Wednesday, the government of President Andres Manuel Lopez Obrador indicated the auto sector would start reopening on Monday and published advice to that effect in the gazette.

The government later withdrew that advice without clarifying unequivocally whether it would affect the restart dates. On Thursday, it published new instructions indicating the industry would not be allowed to reopen until June 1.

Senior U.S. politicians and auto companies in particular have been pressing the Mexican government to reopen factories, but the conflicting statements have stirred concern about ongoing industry disruptions.

The U.S. Motor & Equipment Manufacturers Association on Friday thanked Lopez Obrador for his efforts to ramp up vehicle and parts production in Mexico, and said its members were working to put in place the required safety protocols.

"Allowing motor vehicle parts manufacturing to take steps toward reopening will be a critical component to economic recovery," the association said in a statement. Many U.S. assembly lines count on components made in Mexico.

Still, Germany's Daimler AG said Friday it would idle its Mercedes-Benz SUV assembly plant in Vance, Ala., next week because of a parts shortage.

An industry source said the decision was taken due to a lack of parts from Mexico. Daimler has not clarified whether shortages in Mexico were the reason.

Mexico makes several popular models sold in the U.S., including the Chevy Silverado, Toyota Tacoma, Chevrolet Blazer, Volkswagen Tiguan, RAM heavy duty trucks, Audi Q5, Mazda CX-30 and BMW 3 sedan. Ford plants in Mexico are also preparing for full production of the new Mach-E and Bronco Sport.

General Motors CFO Dhivya Suryadevara on Friday said the situation would be "fluid" up to the restart, but that the company aimed to start a majority of its operations next week under strict safety measures.

Fausto Cuevas, director general of Mexican automaking lobby AMIA, said his members aim to be able to declare by the weekend that they are meeting the new safety requirements.

"The sooner we can align ourselves with our trading partners in the U.S. and Canada, the closer we'll be to resolving this situation (coronavirus) created," he told a Senate committee.

Still intensifying

The coronavirus outbreak is still intensifying in Mexico, with new infections and confirmed deaths reaching their highest daily totals this week. Mexico registered its first confirmed cases weeks after Canada and the United States.

The health crisis has led to concerns in Mexico, including among lawmakers in the president's ruling National Regeneration Movement, that the government was moving too quickly to reopen the economy.

At the same time, parts of the auto industry had begun preparing for a restart on Monday, saying they regarded the government's statement pointing to May 18 as having legal force.

Lopez Obrador said on Friday that according to experts' projections, the pandemic would begin easing in the worst-hit areas of the country in the coming days.

"We're seeing the light at the end of the tunnel to return to the new reality," he said in a regular news conference.