Staffing woes put U.S. car industry’s remarkable rebound at risk
Published 8:00 am Wednesday, August 19, 2020
Automakers have staged a remarkable recovery toward pre-pandemic production. But within the walls of U.S. auto plants, it was incredibly challenging to pull off – and is proving difficult to sustain.
Manufacturers rushed to restart assembly lines months ago because sales stayed surprisingly buoyant in the midst of the pandemic. Several companies said they restored output completely within weeks after reopening, and the industry has avoided the outbreaks seen at meatpacking plants. But along the way, automakers have been stretched thin by absenteeism, distancing protocols, quarantines and supply-chain constraints.
In several of America’s biggest automaking facilities, foot traffic appears to have never gotten back to February levels, according to Orbital Insight, which collects a nationwide sample of mobile-device location data. While some automakers downplay the challenges they’ve been having, others acknowledge coming under serious strain in getting their factories fired back up.
The numbers are surprising because of just how standout a comeback the auto industry has staged. Since April, the motor-vehicle and parts sector has added 289,000 to U.S. payrolls, a more than 45% surge. Cars also have been the bright spot in the Federal Reserve’s monthly report on industrial production.
Boeing, by contrast, continues to be plagued by scrapped orders that have had a debilitating effect on other aviation businesses, including jet-engine maker General Electric.
Toyota’s factories are emblematic of the unevenness of the foot-traffic recovery across some of the industry’s most important plants. Activity is picking back up at its Highlander sport-utility vehicle factory in Indiana but lagging at its facilities making trucks in Texas and Corollas in Mississippi, according to Orbital Insight’s data.
“We do not anticipate our operations to ‘return to normal’ for some time,” Toyota said in a statement.
Other plants that are far from bouncing back or struggling to sustain their foot-traffic recovery include two key Ford SUV facilities, a Daimler factory that is a key source of Mercedes-Benz vehicles globally and Kia Motors’ only U.S. manufacturing site.
Automakers caution that the number of people in their plants may not necessarily correlate with production. Foot traffic at Ford’s factories is down primarily because the company is limiting admittance to critical staff, a spokesman said. Many suppliers that drop by in normal times have called off visits. Public tours have ceased at its full-size pickup plant in Dearborn, Mich.
Gary Johnson, Ford’s chief manufacturing and labor affairs officer, acknowledged Aug. 3 that automakers and their suppliers have been struggling with absenteeism. But the company said it has been operating at close to 100% of pre-virus production levels.
For Ford and General Motors, the stakes involved in keeping plants cranking out vehicles – particularly pickups and SUVs – are massive. GM almost broke even in North America during the second quarter, a phenomenal feat considering the amount of time its plants were shut down during the period.
At GM, production was down for eight out of 13 weeks during the quarter. The number of vehicles it shipped to retailers plummeted 62%, and U.S. inventory is a little more than half what it was a year ago. Yet Dhivya Suryadevara, the automaker’s departing chief financial officer, cautioned last month that wholesale levels will remain below normal in the second half.
“Even though production is running all-out, it is not quite back at the levels, that pre-COVID ability to run all-out,” Suryadevara said July 29. She is leaving GM to become chief financial officer of the technology company Stripe.
While the Orbital Insight data suggested that foot traffic at GM’s truck factories in Michigan and Indiana hasn’t gotten back to where it was in February, the two facilities are among those that have recovered the most. Dealers are champing at the bit for Chevrolet Silverado and GMC Sierra pickups – “Send me all you can get” was the message Mike Jackson, chief executive officer of retailer AutoNation Inc., delivered on Bloomberg Television in May.
But production may not return to normal this year because of weak demand from fleet customers – both rental companies and government agencies – and since the company is not running plants on overtime, said Jim Cain, a spokesman.
GM has kept open facilities in Texas and Missouri despite calls by the UAW to shut them down over COVID-19 concerns.
Elon Musk has not brought up absenteeism specifically regarding Tesla Inc.’s lone U.S. auto assembly plant, although the CEO did allude to “a bunch of firefighting on supply chain and production issues” during the electric-car maker’s July 22 earnings call.
Representatives for Tesla didn’t respond to requests for comment on Orbital Insight’s data, which suggests there has been a bit of a decline in foot traffic since June at its plant in Fremont, Calif.
Orbital Insight detected a pick-up in activity around the time that Musk said he would reopen the facility regardless of a local shutdown order. By the time county authorities signed off on the company resuming production, the number of devices detected was close to the levels seen before the CEO gave in to pressure to suspend operations in March.
In a regulatory filing last month, Tesla said its ability to sustain output will depend in part on “a stable and motivated production workforce.”
Kia also is looking to make as many of its hot-selling Telluride SUVs as it can in Georgia, but it’s had to gradually restore output due to supplier constraints.
“Absenteeism has been higher as a result of the pandemic but has not resulted in reduced production,” said Patrick Sands, a U.S.-based spokesman for the South Korean company.