Skip to main content
Sister Publication Links
  • European Rubber Journal
  • Plastics News
  • Tire Business
web
Subscribe
  • Login
  • Register
  • Subscribe
  • News
    • Automotive
    • Tire
    • Non-Tire
    • Suppliers
    • Silicone
    • Latex
    • Coronavirus
    • Executive Action
    • Government/Legal
    • Opinion
    • Technical Notebooks
    • Women in Tire & Rubber
    • ITEC
    • International Elastomer Show
    • HEXPOL Sponsored Content
    • Continental invests in AI company
      Michelin launching ‘eco-responsible' performance tire for sporty EVs
      GM promotes Siemen to lead sustainability; Parker to retire
      Video: Michelin driving for ‘100% sustainable' tires by 2050
    • Michelin launching ‘eco-responsible' performance tire for sporty EVs
      Video: Michelin driving for ‘100% sustainable' tires by 2050
      USTMA: U.S. tire shipments to rebound in 2021
      TIA among associations against increase to minimum wage
    • Continental invests in AI company
      To boost U.S. microchip production, Biden administration must find supply chains weaknesses
      USTMA, NAM among associations backing passage of Equality Act
      ASC seeks presenters for fall convention
    • Sibur set to launch production at new halobutyl rubber facility
      Braskem to invest $61M to expand green ethylene production capacity
      Zeon receives pair of ISO certifications
      Trinseo taps K.D. Feddersen to supply soft-touch elastomers
    • Stockwell Elastomerics' legacy moves on
      Larger mixers tout economies of scale, along with the need for speed
      Hexpol, Bloom deal with COVID, reorganization, fire since start of 2020
      Small, mid-size compounders keep value, agility, service 'in the mix'
    • Ohio firm focuses on making better masks in U.S.
      U.S. to increase NBR, make gloves using Defense Production Act
      Tire Cologne canceled; rescheduled for 2022
      Tire Technology Expo canceled for 2021
    • Harwick Standard adds Flores to West Coast sales team
      GM promotes Siemen to lead sustainability; Parker to retire
      9 Goodyear-Cooper Tire stories you may have missed
      Goodyear promotes Chris Helsel, expanding his global technology, operational role
    • To boost U.S. microchip production, Biden administration must find supply chains weaknesses
      TIA among associations against increase to minimum wage
      9 Goodyear-Cooper Tire stories you may have missed
      Cooper recalling 430,000+ whitewall LT tires in multiple brands
    • Column: Discussions of race, equality may mean uncomfortable moments
      Column: Business trips possible because of essential workers
      Editorial: Associations see opportunity for progress under new administration
      Editorial: Against a backdrop of turmoil, M&A deals give glimpse of normalcy
    • Studying RPA ASTM methods for detecting compound quality differences
      Damage mechanism in oil and gas formulations during downhole testing
      Advancements in synchronous drive belt design for industrial and consumer markets
      Effects of multiple repurposed materials for reinforcements of standard rubber compounds
    • Rubber Division introduces WORD webinar series
      WORD panelists say evolution, authenticity keys to success
      New video celebrates women in rubber industry
      ITEC panelists say women can thrive in tire industry
    • Goodyear recognized by Lockheed Martin as 'elite supplier'
      EV tire advancements to help secure future
      Lambillotte: Only question on AVs is timing
      CAR official says EV future brighter than autonomous
    • Rubber Division introduces WORD webinar series
      Rubber Division seeks abstracts for 200th Technical Meeting
      WORD panelists say evolution, authenticity keys to success
      IEC keynote: Communication key to logistics
    • Sponsored By HEXPOL Compounding
      Faster Access to Your Polymer Compounding Experts Around the World
      Sponsored By HEXPOL Compounding
      Take a walk thru a HEXPOL Lab
      Sponsored By HEXPOL Compounding
      HEXPOL offers a unique selection of High Performance Elastomers to match your application requirements
      Sponsored By HEXPOL Compounding
      It’s what you can’t see that makes the Difference at HEXPOL
  • Blogs
    • Products
    • Wacky World of Rubber
    • New Products: Starrett expands field-of-view for multi-sensor vision system
      New Products: Nova thinks outside the box with sealing tech
      New Products: MonTech introduces 1,500 kN lab press
      New products: 3M introduces new durable, pliable medical adhesive
    • Wacky World of Rubber: How Trelleborg, teens sealed a spot in the world record book
      Wacky World of Rubber: Of chicken and feet, but not chicken feet
      Wacky World of Rubber: Time to go mattress shopping
      Wacky World of Rubber: Because nothing says football like 'frunk' shrimp
  • Newsletters
    • Rubber in Automotive
    • Silicone News
    • Latex News
    • Sign Up for Newsletters
    • Continental invests in AI company
      Michelin launching ‘eco-responsible' performance tire for sporty EVs
      GM promotes Siemen to lead sustainability; Parker to retire
      Video: Michelin driving for ‘100% sustainable' tires by 2050
    • Stockwell Elastomerics' legacy moves on
      Larger mixers tout economies of scale, along with the need for speed
      Hexpol, Bloom deal with COVID, reorganization, fire since start of 2020
      Small, mid-size compounders keep value, agility, service 'in the mix'
    • Sri Trang Gloves starts major capacity expansion
      Synthomer dismisses takeover reports
      Combined Goodyear-Cooper Tire company has tire technology, sustainability edge
      Helixtap launches new digital marketplace for rubber
  • Multimedia
    • Videos
    • Photo Galleries
  • Directory
  • Resources
    • Classifieds & Mold Mart
    • Sponsored Content
    • White Papers
    • HB Chemical
      Sponsored By HB Chemical
      The HB Chemical and Ravago Partnership: Taking Customer Service to a New Level
      Sponsored By HB Chemical
      Above and Beyond with HB Chemical
      Sponsored By HB Chemical
      The Company Behind the Inventory
      Sponsored By French Oil Mill Machinery
      Process Improvement, Cost Reduction with Custom Press Systems
    • Sponsored By Uncountable Inc.
      Labs of the Future: How to Choose a Laboratory Information Management System in 2021
      Sponsored By Uncountable Inc.
      Cooper Standard deploys lab informatics platform to synchronize R&D
      Sponsored By Elkem
      LSR Select™: A solution to improve your financial impact in molding applications
      Sponsored By HEXPOL Compounding
      Peroxide Cureable Silicone Injection Molding
  • Data
  • Events
    • RPN Events
    • RPN Livestreams/Webinars
    • Industry Events
    • Past Events
    • ITEC Library
    • International Silicone Conference Library
    • 2021 Healthcare Elastomers Virtual Edition
      2021 Rubber in Automotive Virtual Edition
      2021 International Latex Conference Virtual Edition
      2022 ITEC
  • Advertise
  • DIGITAL EDITION
MENU
Breadcrumb
  1. Home
  2. Automotive
March 16, 2020 09:39 AM

COVID-19 clears out offices, threatens to decimate auto sales

Michael Martinez
Automotive News
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print

    This isn't the kind of disruption the auto industry has been preparing to confront.

    The rapid spread of the novel coronavirus in the U.S. left auto makers and suppliers scrambling last week to keep employees safe, dealerships open and factories running.

    In a matter of days, companies instituted sweeping travel bans and canceled high-profile product introductions. Executives instructed tens of thousands of salaried employees to work from home, and the UAW quickly began negotiations with the Detroit 3 for any quarantined factory workers to get paid leave.

    Auto shows and other industry events, including the Automotive News World Congress, were postponed or canceled as the number of people in the U.S. known to have contracted COVID-19 jumped into the thousands. A Fiat Chrysler Automobiles transmission plant in Indiana stayed open after having the first known case of an auto worker testing positive, but the Canadian union Unifor briefly shut down production at FCA's minivan plant in Ontario on March 13 after one employee self-quarantined because of possible secondary contact.

    While the full scope of the pandemic remains uncertain, the U.S. auto industry faces the potential for plunging new-vehicle sales and plant shutdowns that could cripple production, eat into profits and supercharge the chances of a recession.

    "The underlying economics of the industry are strong, but this threw a monkey wrench into it," Michelle Krebs, executive analyst at Autotrader, told Automotive News. "We're holding our breath to see what happens."

    Auto stocks, reflecting steep drops in the overall market, cratered last week to decade-low levels. Analysts have revised their industry sales projections to call for declines of 3 to 9 percent this year, noting the societal upheaval that has included the cancellation of virtually all sports leagues' games and major events could cause consumers to delay big purchases. And automakers will miss out on the advertising opportunities created by heavily watched sporting events such as the NCAA men's basketball tournament that have been called off.

    Cash for Clunkers

    To underscore the level of concern within the industry, Adam Jonas, an analyst with Morgan Stanley Research who estimated that sales could fall by a million vehicles this year, said law makers should consider reprising the recession-era Cash for Clunkers program as a "powerful tool" to stimulate sales.

    "Given the behavioral and economic implications brought on by social distancing, we are preparing for potentially significant swings in U.S. SAAR," he said, while noting "there may be a number of other alternatives law makers could use to help revive critical industries such as autos if necessary."

    Last week's decision to postpone the New York auto show from April to August was among the first major disruptions to the North American auto industry related to the virus. It already had forced the cancellation of this month's Geneva International Motor Show and next month's Beijing show.

    John LaSorsa, who chairs the auto show committee for the Greater New York Automobile Dealers Association, said the group had not been told by any auto makers that they wouldn't participate with reveals in the rescheduled show.

    LaSorsa said organizers reached out to key partners, including auto makers, before making the decision to postpone. He said he is optimistic the New York show might even pick up a few more reveals given the later calendar date.

    The gathering originally was expected to include roughly 50 product introductions, including the Ford Bronco Sport and Volkswagen ID4.

    "August can be just as popular as April," he said. "We may miss a few, obviously, but we could have some new additions, too."

    But Ford is unlikely to wait that long to pull the wraps off the Bronco Sport or the larger Bronco SUV. The long-awaited product reveals, which were slated to happen a week apart in April, have been indefinitely postponed.

    The Bronco Sport is set to go into production as early as September, so a late-August reveal might not make sense. Ford declined to offer a revised timeline of when it might show the vehicles.

    "There's a fair amount of uncertainty," said Mark Truby, Ford's chief communications officer. "We're very much rallying around how to manage the situation."

    Work from home

    Executives at the Detroit 3 are encouraging most salaried employees to work remotely starting this week.

    At GM, the work-from-home policy applies to all employees whose jobs allow them to work away from their office, except for those in China, which has existing protocols in place.

    Not all teams are able to work remotely, so the auto maker also is adjusting work schedules in manufacturing, global product development, customer care and aftersales and contact centers to allow for additional cleaning, CEO Mary Barra said.

    "These are important steps to lower the probability of spreading the coronavirus to co-workers, families and communities and to relieve the burden on public resources. It also helps conserve critical resources like cleaning crews, medical staff and supplies so they can be deployed where they are most needed," Barra said in a statement March 13.

    In a similar memo to employees the same day, Ford CEO Jim Hackett said a vast majority of Ford's salaried work force should begin working from home this week, so long as their in-person attendance wasn't necessary. Exceptions could include those working in manufacturing facilities, parts distribution centers and certain sales positions.

    Truby, on a conference call with reporters, said the auto maker's world headquarters and Product Development Center would remain open, with some small teams continuing to work there.

    "This is a fairly fluid situation, but I don't expect any of our major facilities to be completely shut down," he said.

    FCA also expanded its remote-work capabilities and implemented strict limitations on visitors.

    In a letter to employees about the virus outbreak, CEO Mike Manley wrote, "Clearly, we are now moving beyond regional hot spots and into planning for how this will impact every area of our business across the world."

    Jonathan Smoke, chief economist at Cox Automotive, said the market is swinging between dangerously different scenarios. In the first, new-vehicle sales decline to a range of 15.5 million to 16 million, with the high-end resting 600,000 vehicles below Cox's initial forecast for 2020.

    But, if the coronavirus sparks a full-blown recession, Smoke said, new sales could plummet to mid-14 million.

    "We see economic contraction in Q2 no matter what," he said. "The key question is whether the contraction extends into Q3 and later."

    'No denying'

    Morgan Stanley expects the coronavirus outbreak to send U.S. auto sales down 9 percent this year, it said in an investor note last week. Before the outbreak, analysts had expected a modest decline of 1 to 2 percent.

    LMC Automotive cut its U.S. forecast by nearly 300,000 vehicles to 16.5 million, a 3 percent drop from 2019.

    "Whether you believe there is a public overreaction or that COVID-19 is actually a public health crisis headed for pandemic status, there is no denying the expected negative impact it will have on the economy and auto industry," Jeff Schuster, LMC's president of global vehicle forecasts, said in a statement.

    If the economy recovers rapidly from coronavirus concerns, TrueCar subsidiary ALG projects new-vehicle sales of 16.4 million in 2020, down 2.9 percent from its initial forecast and 3.8 percent from last year's total. A longer economic slowdown could drop vehicle sales to 14.5 million, ALG said, a 14 percent drop from its initial 2020 predictions.

    Hannah Lutz, Vince Bond Jr., Melissa Burden and Jackie Charniga contributed to this report.

    Letter
    to the
    Editor

    Rubber & Plastics News wants to hear from its readers. If you want to express your opinion on a story or issue, email your letter to Editor Bruce Meyer at [email protected].

    SIGN UP FOR NEWSLETTERS
    EMAIL ADDRESS

    Please enter a valid email address.

    Please enter your email address.

    Please verify captcha.

    Please select at least one newsletter to subscribe.

    Get our newsletters

    Staying current is easy with Rubber & Plastics News delivered straight to your inbox, free of charge.

    Subscribe Today

    Subscribe to Rubber & Plastics News to get the best coverage and leading insights in the industry.

    SUBSCRIBE
    Connect with Us
    • LinkedIn
    • Facebook
    • Twitter

    MISSION

    To serve companies in the global rubber product industry by delivering news, industry insights, opinions and technical information.

    web
    Contact Us

    2291 Riverfront Pkwy, Suite 1000
    Cuyahoga Falls,
    OH 44221

    Customer Service:
    877-320-1726

    Resources
    • About Us
    • Digital Edition
    • Contact the Staff
    • Advertise
    • Order Reprints
    • Privacy Policy
    • Privacy Request
    • Terms of Service
    • Careers
    • Ad Choices Ad Choices
    • Sitemap
    Partner Sites
    • Tire Business
    • European Rubber Journal
    • Plastics News
    • Plastics News China
    • Urethanes Technology
    • Automotive News
    • Crain Brands
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • Automotive
      • Tire
      • Non-Tire
      • Suppliers
      • Silicone
      • Latex
      • Coronavirus
      • Executive Action
      • Government/Legal
      • Opinion
      • Technical Notebooks
      • Women in Tire & Rubber
      • ITEC
      • International Elastomer Show
      • HEXPOL Sponsored Content
    • Blogs
      • Products
      • Wacky World of Rubber
    • Newsletters
      • Rubber in Automotive
      • Silicone News
      • Latex News
      • Sign Up for Newsletters
    • Multimedia
      • Videos
      • Photo Galleries
    • Directory
    • Resources
      • Classifieds & Mold Mart
      • Sponsored Content
      • White Papers
    • Data
    • Events
      • RPN Events
      • RPN Livestreams/Webinars
      • Industry Events
      • Past Events
      • ITEC Library
      • International Silicone Conference Library
    • Advertise
    • DIGITAL EDITION