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© Reuters. FILE PHOTO: A General Motors assembly worker works on assembling a V6 engine, used in a variety of GM cars, trucks and crossovers, at the GM Romulus Powertrain plant in Romulus,By Ben Klayman
DETROIT (Reuters) – The Detroit Three automakers will shut down their U.S. plants to stop the spread of coronavirus, bowing to pressure from the union representing about 150,000 hourly workers at those facilities, industry officials said.
Ford Motor Co (N:) and General Motors Co (N:) confirmed the decisions to shut U.S. plants, as well as factories in Canada and Mexico. Fiat Chrysler Automobiles NV (MI:) was expected to follow suit.
The Detroit automakers’ shares took a beating on Wednesday, with GM down 18.8% and Ford down 14.6% in late afternoon trading. Fiat Chrysler shares were down 14.3% in New York. The Detroit automakers’ North American factories build their most profitable trucks and sport utility vehicles, such as Fiat Chrysler’s Jeep Wrangler, GM’s Chevrolet Silverado pickup and the Ford F-series truck line.
The actions come less than a day after the automakers and the United Auto Workers union agreed to keep plants running with reduced shifts and staffing, and more time allowed for cleaning.
But that deal was put aside on Wednesday morning after Honda Motor Co said it would shut its North American factories for six days because of a slump in demand, and a worker at a Ford assembly plant in Michigan tested positive for the coronavirus.
Ford on Wednesday morning closed the final assembly building at its complex in Wayne, Michigan, where it builds the Ranger pickup truck and will assemble Bronco sport utility vehicles.
Ford said it would close all its North American plants after Thursday evening’s shifts through March 30 to thoroughly clean the factories in the United States, Canada and Mexico.
South Korea’s Hyundai Motor Co (KS:) closed its Montgomery, Alabama, assembly plant on Wednesday morning after an employee there tested positive for COVID-19. There were no details on when it would reopen. In addition, FCA on Wednesday closed its Sterling Heights, Michigan, plant in a cautionary move.
The Detroit Three automakers have not yet issued profit warnings, but Germany’s BMW (DE:) on Wednesday said its 2020 profit would be “significantly lower” than last year.
The pain could also be felt by the U.S. government, which would lose $2 billion in tax revenue if sales in the entire U.S. auto sector stopped for a week, according to the Center for Automotive Research in Ann Arbor, Michigan.
United Auto Workers (UAW) union President Rory Gamble, who had previously called on the automakers to close their U.S. plants, in a Wednesday statement called the Detroit Three shutdowns “the prudent thing to do.”
“Recent developments in North America make it clear this is the right thing to do now,” GM Chief Executive Mary Barra said in a separate statement.
Affected workers qualify for unemployment as well as supplemental pay from the automakers, the union said.
It was not clear whether the automakers would seek to substitute this shutdown for the one they typically take annually during the summer, with GM and Ford officials saying it was too early to speculate.
Meanwhile, other automakers in North America are still operating assembly plants, including BMW’s Spartanburg, South Carolina, facility, and Toyota Motor Corp’s (T:) North American factories.
Tesla Inc (O:) was operating its plant in Fremont, California, on Wednesday, despite a statement from local officials that the factory cannot continue to operate as the San Francisco Bay Area began a three-week lockdown.
