Big 3 Automakers Set to Return to Work May 18, Lear and American Axle Report Q1 Earnings, Cooper-Standard Sells Some Operations

Ford Motor Co., General Motors Co., and Fiat Chrysler Automobiles each have announced plans to initiate phased restarts at their production facilities beginning on Monday, May 18. Other automakers with U.S. plants as well as suppliers are likely to follow suit.
6-foot marker at Ford facility
Ford, GM, and FCA plan to begin reopening their North America operations with safety precautions in place on May 18. // Photo courtesy of Ford Motor Co.

Ford Motor Co., General Motors Co., and Fiat Chrysler Automobiles each have announced plans to initiate phased restarts at their production facilities beginning on Monday, May 18. Other automakers with U.S. plants as well as suppliers are likely to follow suit.

Ford’s restart for its North America operations include restarting vehicle production in North America and bringing back the first wave of employees that are not able to do their jobs remotely.

“We’ve been working intently with state and federal governments, our union partners, and a cross-section of our workforce to reopen our North American facilities,” says Jim Farley, COO at Ford. “We have reopened our facilities in China, successfully begun our phased restart in Europe, and have been producing medical equipment in Michigan for more than six weeks and are using the lessons from all of that to ensure we are taking the right precautions to help keep our workforce here safe.”

Ford’s North American parts depots will resume full operations on Monday, May 11. On May 18, Ford’s North American assembly plants previously operating on three-shift patterns will return with two-shifts, most two-shift plants will return on one shift, and most one-shift plants will operate on one shift. Flat Rock Assembly Plant in Flat Rock and Oakville Assembly Complex in Oakville, Ont., are expected to resume production the week of May 25 on one shift. Components plants will restart production as needed to support this plan.

The ramp-up process will be gradual as workers adjust to the new health and safety protocols and the entire supply chain comes up to speed.

To guide the workforce with the new health and safety protocols, Ford has compiled a comprehensive Manufacturing Return to Work Playbook to help protect its workforce, assembled using best practices and input from experts around the world.

Ford also is helping its dealers get back on their feet by offering them free, custom commercials that allow them to quickly reach their audiences with updates on how they are adapting to the COVID-19 pandemic. The ads are provided by FordDirect and Waymark, which has designed a series of free COVID-19 response templates for businesses of all sizes in a variety of industries.

The two metro Detroit-based companies joined forces earlier this year to create the FordDirect Video Marketplace, where Ford and Lincoln dealers nationwide have access to videos they can easily customize for use on social media, digital advertising, and TV. Due to the ongoing pandemic, Waymark and FordDirect are offering custom video templates for free so dealers can quickly inform audiences of new developments, initiatives, and updates.

GM announced Wednesday that it also plans a May 18 return to work, “under extensive safety measures,” across the U.S. and Canada.

“These global, standardized measures were informed by learnings from GM facilities in China; Korea; Kokomo, Ind.; Arlington, Texas; Warren, Mich.; Customer Care and Aftersales operations; as well as collaboration with union leadership and supplier partners,” GM said in a statement. “These procedures meet or exceed CDC and WHO guidelines and are designed to keep people safe when they arrive, while they work, and as they leave the facility.”

To help its employees understand what their work environment will be like when they return, GM is inviting them to a webinar to preview its Return to Work with Confidence Playbook and learn more about the safety precautions the automaker is taking to protect its employees and communities. Webinars will be offered at many times on Monday, May 11. Employees should register here before 5 p.m. on Sunday, May 10.

Earlier, FCA became the first automaker to announce a production restart date, also May 18.

FCA had announced plans in April to reopen May 4, but that idea was nixed by the UAW, which said opening that early was “too risky.”

All three manufacturers shut down their facilities in March as the COVID-19 pandemic became a local and national emergency.

In Related News, Lear Corp. in Southfield, a global automotive supplier of seating and E-Systems, today reported results for the first quarter. The results show sales of $4.5 billion at the end of March, compared to $5.2 billion in the first quarter of 2019, while net income came in at $76 million with adjusted net income of $124 million, compared to $229 million and $253 million, respectively, in the prior year.

Lear stated industry disruptions related to COVID-19 during the first quarter impacted operations in all of its major markets. Global vehicle production declined by 23 percent compared to a year ago, with China down 47 percent, Europe down 19 percent, and North America down 10 percent.

“Our first quarter financial results were significantly impacted by production disruptions stemming from the COVID-19 pandemic. We experienced plant shutdowns in China beginning in late January that were followed by shutdowns of almost all our global operations outside of China beginning in mid- to late March. Excluding the impact of COVID-19, Lear’s results reflect solid financial performance in both of our business segments. While significant near-term challenges remain, I am confident in the strength of our underlying business, long-term competitive position, and liquidity,” says Ray Scott, president and CEO of Lear.

The auto supplier said it is working closely with its global customers and supply chain to help the industry prepare for the challenges associated with restarting manufacturing facilities, but no exact date was given for reopening its North American operations. Lear adds it has embarked on a comprehensive evaluation of its supply base to identify and address any gaps that could impact the restarting of production. In addition, Lear said it is providing support to government agencies and industry trade groups and advising state and local government leaders on best practices related to safely and efficiently resuming production.

In Addition, American Axle and Manufacturing Inc. in Detroit, which designs, engineers, and manufactures driveline and metal forming technologies, today reported first quarter revenue of $1.34 billion as compared to $1.72 billion in the first quarter of 2019. AAM estimates its sales for the first quarter of 2020 were unfavorably impacted by COVID-19 by approximately $169 million. In addition, first quarter 2019 sales include $182 million related to AAM’s U.S. iron casting operations, which were sold in December 2019.

AAM’s net loss in the first quarter of 2020 was $501.3 million, or $4.45 per share, as compared to net income of $41.6 million, or $0.36 per share in the first quarter of 2019. AAM estimates that its net loss in the first quarter of 2020 was unfavorably impacted by lower production as a result of COVID-19 by approximately $37 million, or $0.33 per share.

“AAM delivered strong operating performance and free cash flow generation in the first quarter of 2020 despite the unfavorable impact of COVID-19 on global light vehicle production. We expect this unprecedented health crisis and related effect on global light vehicle production and consumer demand to further impact AAM’s financial results in the second quarter of 2020,” says David C. Dauch, CEO and chairman of AAM. “As we begin to resume our global operations, we are focused on securing a safe and healthy workplace for our associates while utilizing our variable cost structure to mitigate the steep decline in global production volumes. In addition, we will continue to work with our supply base to meet customer requirements and structurally adjust our operations to the new market demand.”

In Other Automotive News, Cooper-Standard Holdings Inc. in Northville Township, a global supplier of sealing, fuel and brake, and fluid transfer systems for transportation and industrial markets, today announced it has signed an agreement to divest its European rubber fluid transfer and specialty sealing businesses, as well as its Indian operations, to Mutares SE & Co. KGaA.

“This transaction, when closed, will enable us to focus company resources on our businesses that provide the greatest opportunity for growth and profitability,” says Jeffrey Edwards, chairman and CEO of Cooper-Standard. “It is consistent with strategic initiatives that we have discussed for the past several quarters, and we expect it will be immediately accretive to our earnings and cash flows going forward.”

The agreement includes approximately 2,500 employees and two manufacturing facilities in Poland, one manufacturing facility in both Spain and Italy, and all of the company’s operations in India, excluding the company’s corporate IT development office located in Chennai.

Completion of the divestiture is subject to the approval of the respective antitrust authorities and is expected to be finalized by the end of the second quarter 2020. Cooper-Standard said it will work closely with Mutares and all involved parties to help ensure a smooth transition for all stakeholders. The company employs approximately 28,000 people globally and operates in 21 countries around the world.

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