Auto plants are getting ready to fire up their engines and begin running again on Monday. This will be the first major sector to reopen, at a time when the country could use some good news. The Associated Press estimates that 133,000 people will return to work.
Automotive plants have been idled for two months, costing companies billions and impacting one million jobs. In Michigan, over one third of the workforce has sought unemployment benefits. This put considerable pressure on the state’s unemployment insurance fund, draining it by half a billion dollars in April. Industrial production numbers, which were released on Friday showed United States manufacturing contracting by 11.2% yearly in April. Within that, production of cars and car parts plunged by 70% year over year. Industry operated at 64.9% capacity that month, breaking a previous record set during the Great Depression.
The question remains of how many people are ready to buy. Sales fell by 46% yearly since April of last year and are predicted to contract by 30% yearly in May. Industry executives believe there is plenty of pent up demand, however. Ford reports that consumers are already coming back.
Although one hopes that the virus does not spread through the auto industry, it seems unlikely with thousands of people returning to close quarters. Last month saw several meat processing plant closures due to coronavirus outbreaks, a fate that automakers want to avoid. A fresh outbreak could send the industry into retreat, on top of the human cost. Factories are rolling out new safety plans to protect workers. New safety measures will include touchless temperature screening upon arrival, a daily symptom survey, gloves, masks, and face shields, and artificial barriers to promote social distancing.
Mexico might present a snarl. After initially announcing that Mexican plants would reopen on Monday, along with facilities in the United States, the government backtracked. Now, Health Ministry officials are saying that automotive facilities will need until June 1st to prepare needed safety protocols. The United States imported 39% of car parts from Mexico in 2019, according to the Center for Automotive Research. Vehicles and vehicle parts are consistently a top import from below the border.