Detroit’s Big Three automakers – General Motors, Fiat Chrysler and Ford – have agreed to close all of their factories due to worker fears about the coronavirus.
Two people briefed on the matter confirmed the forthcoming closures – which will idle around 150,000 workers – on Wednesday. The firms are expected to release details later in the day.
The decision reverses a deal worked out late Tuesday under which the automakers would cancel some shifts so they could thoroughly clean equipment and buildings while keeping factories open.
But workers, especially at some Fiat Chrysler factories, were still fearful of coming in contact with the virus and pressured the United Auto Workers union to push for full closures.
Honda Motor Co also announced on Wednesday that it will temporarily close its North American factories for about one week starting on Monday.
The closures came hours after Treasury Secretary Steven Mnuchin reportedly warned that the US could see an unemployment rate of 20 percent as the coronavirus pandemic plunges the economy into a recession, which experts say has likely already begun.
Detroit’s Big Three automakers – General Motors, Fiat Chrysler and Ford – have agreed to close all of their factories due to worker fears about the coronavirus. Workers are seen assembling Ford F-150 trucks at the Ford Rouge plant in Dearborn, Michigan, in the file photo above
The United Auto Workers union had been pushing for full closures as employees feared coming in contact with the deadly coronavirus (file photo)
Fiat Chrysler temporarily closed a factory in Sterling Heights, Michigan, north of Detroit after workers were concerned about the virus.
The company said a plant worker tested positive for the coronavirus but had not been to work in over a week.
One shift was sent home Tuesday night and the plant was cleaned. But that apparently didn’t satisfy workers, and two more shifts were canceled on Wednesday.
Under an agreement reached with the union, companies will monitor the situation weekly to decide if the plants can reopen, one of the people said.
During the shutdown, GM, Fiat Chrysler and Ford workers will likely receive supplemental pay in addition to state unemployment benefits.
The two checks combined will about equal what the workers normally make.
Automakers have resisted closing factories largely because they book revenue when vehicles are shipped from factories to dealerships.
So without production, revenue dries up. Each company has other reasons to stay open as well.
Ford, for instance, is building up F-150 pickup inventory because its plants will have to go out of service later this year to be retooled for an all-new model.
During the shutdown, GM, Fiat Chrysler and Ford workers will likely receive supplemental pay in addition to state unemployment benefits. An assembly line at a GM plant in Lansing, Michigan is seen in the file photo above
Under an agreement reached with the union, companies will monitor the situation weekly to decide if the plants can reopen, one person familiar with the matter said
As of Wednesday afternoon, 7,898 people in the US have tested positive for COVID-19 across all 50 states and 121 have died
Automakers have already begun downgrading 2020 sales forecasts due to coronavirus.
Morgan Stanley anticipates US demand for new cars will plummet to 15.5 million, down nearly 10 percent from last year’s 17.1 million.
Data from the Center for Automotive Research indicates that the loss of a single week of auto sales in the US could have a devastating ripple effect on the broader economy.
For every seven-day period that consumers stop purchasing new cars, the US economy would lose roughly $7.3billion in overall earnings and 94,400 jobs, according to CAR projections.
A statue of George Washington is seen by the New York Stock Exchange on Monday. Economists for Goldman Sachs and Morgan Stanley say that a recession has already begun
Just as reports emerged about the anticipated Big Three closures, President Donald Trump moved to invoke a federal law that allows the government to marshal the private sector to deal with the coronavirus epidemic.
On a day of head-spinning developments, stocks tumbled again on Wall Street.
More borders slammed shut across Europe and North America, with the US and Canada agreeing to close their shared boundary to all but essential travel.
And the Trump administration pressed Congress to swiftly pass a potentially $1trillion rescue package to prop up the economy and speed relief checks to Americans in a matter of weeks.
Calling himself a ‘wartime president’, Trump said he would sign the Defense Production Act ‘in case we need it’ as the government bolsters resources for an expected surge in cases of the virus.
With a growing number of Americans thrown out of work by the near-shutdown of much of the US economy, he also said the Housing and Urban Development Department will suspend foreclosures and evictions from public housing through April.
President Donald Trump moved to invoke a federal law that allows the government to marshal the private sector to deal with the coronavirus epidemic on Wednesday
A trader is seen praying on the floor of the New York Stock Exchange at the opening bell of the Dow Industrial Average on Wednesday
In a meeting with Senate Republicans on Tuesday, Mnuchin said he believes economic fallout from the coronavirus has the potential to be worse than the 2008 financial crisis.
According to Bloomberg News, Mnuchin said that the virus could drive up the unemployment rate if lawmakers don’t provide a swift financial response to wage workers and small- and medium-sized businesses.
A Treasury Department spokeswoman told Bloomberg that during the meeting ‘Secretary Mnuchin used several mathematical examples for illustrative purposes, but he never implied this would be the case’.
Regardless, economists for Goldman Sachs and Morgan Stanley say that a global recession has likely already begun, with the only question remaining how severe the pullback will be, and how long it will last.
Treasury Secretary Steven Mnuchin reportedly warned that the US could see an unemployment rate of 20 percent during a meeting with Senate Republicans on Tuesday
‘We expect the recession to be front-loaded, with a recovery in [the second half of the year],’ said Goldman Sachs’ chief economist in a note to clients.
‘This assumes that infections will slow significantly by the end of April as the lockdowns and other mitigation measures bear fruit.’
Meanwhile, in a new Marist poll conducted for NPR/PBS News earlier this week, 18 percent of US adults said that they had already lost their job or had their hours reduced due to the pandemic.
At the national level, President Donald Trump promised he’s ‘going big’ with plans to blunt the economic pain caused by the coronavirus outbreak.
Trump wants the government to send checks to Americans in the next two weeks to help support them while chunks of the economy come closer to shutting down, Mnuchin said Tuesday.
Gains for stocks accelerated temporarily as Trump and Mnuchin spoke at a briefing, but neither gave details about how big the stimulus could be.
Mnuchin is pitching Senate Republicans on a roughly $850billion stimulus plan to help the economy, including relief for small businesses and the airline industry.
Across the country, indications were stark that the pandemic, and the measures being taken to contain it, are having a severe effect on workers across a range of industries.
Travel has ground to a standstill, with business and personal trips being put on hold, and increasingly severe international travel bans.
American hotel and travel industry executives from companies such as Marriott and Hilton met with Trump on Tuesday to discuss a potential $250billion aid package, as thousands of hotel workers began furloughs due to the fast-spreading coronavirus.
The requested package would consist of $150billion in direct aid for the hotel sector and $100billion for related travel companies, including convention businesses, industry executives said on a call after the meeting with Trump, who made his fortune in real estate and hotels.
Separately, the airline industry has asked for $58billion in assistance for both passenger and cargo carriers, plus $10billion for airports.
Meanwhile, a spate of orders closing all restaurants and bars for dine in service in New York, California, New Jersey, Illinois and many other states has devastated those who work in the industry.
Across the country, there were 11,674,000 people working in restaurants and bars as of February, according to federal data.
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