US auto suppliers balancing pressure to restart vs state stay-at-home orders

Detroit — French seating and interiors supplier Faurecia told employees this week that work will resume at a Michigan plant May 4, after earlier asking some employees to start work next week, while the state's stay-at-home order is still in effect.

As automakers make plans to ramp up amid COVID-19, many suppliers are caught between customer needs for parts to resume vehicle assembly and state orders limiting commercial activity to those necessary for sustaining and protecting life.

In Michigan, Gov. Gretchen Whitmer's stay-at-home order that prohibits public gatherings, motor boating and in-state residence-to-residence travel is in effect until May 1. The Michigan Manufacturers Association has asked Whitmer to amend her stay-at-home order to allow automakers and suppliers to resume production, CEO John Walsh said Wednesday.

While the order makes exceptions for transportation-related work, it doesn't explicitly endorse automotive manufacturing, said Walsh. The organization has asked Whitmer to call it essential.

"We've been advocating that the governor modify her original executive order to … clarify the automotive industry as an essential industry," Walsh told Crain's Detroit Business, a sibling publication of Plastics News.

While some auto companies have slowly returned to work in other parts of the world, last week several automakers and suppliers began targeting the first and second weeks of May to restart vehicle production in the U.S. Walsh said manufacturers have notified suppliers "that it's time to get started."

Faurecia posted a memo for its Saline, Mich., employees on April 17 telling them to report to work on Monday, April 27, to restart production for Tesla. The injection molding plant in Saline, which last year employed 1,900 members of UAW Local 892, supplies interior parts to Tesla, Ford and Fiat Chrysler, the union said. Those parts include instrument panels and center consoles. The memo was widely distributed to employees on April 21 via text.

Faurecia also informed its employees in its April 17 memo, obtained by Automotive News, that the plant would restart on May 4 for Ford Motor Co. and Fiat Chrysler Automobiles.

But on Wednesday, Faurecia backtracked on its Tesla production plans in another memo to employees, saying the target date is now May 4 and that "production will not start on 4/27 as previously indicated."

Walsh said manufacturers have been "polite but terse" about potential financial penalties if suppliers are not ready to fulfill orders by May 4.

"Yes, suppliers will have to be ramping up now for the planned (May 4) restarts across North America," Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor, Mich.

To resume production, manufacturers must not only ensure that they are legally allowed to operate, but they most persuade employees that it is safe to do so.

"This is going to be a very slow process in terms of everyone getting back to production. So much is going to be new and different within the plant facilities as well as for employees themselves. My sense is the first few days, if not, even weeks of production, will be much slower," said Julie Fream, CEO of the Original Equipment Suppliers Association.

Fream said she is still advocating for a coordinated restart of the overall industry with Washington policymakers.

Faurecia's April 17 memo to employees addressed health and safety measures the plant will implement, including checking employees' temperatures, restricting entry to the center gate and distributing masks. These safety measures have been encouraged by auto suppliers, such as Lear Corp., and OESA.

Workers were told that upon return to the plant, the recommended 6-foot rule for social distancing in the workplace would apply only to employees that did not have a mask — otherwise, all employees will be working at a 3-foot distance, a Faurecia plant employee who requested to remain anonymous told Automotive News. At least 75 employees work on Faurecia's Tesla shift.

"I don't feel that, with the governor's order still in place, that anyone should be going in there right now," said the employee, who has not reported to work since March 19 per state orders.

"They [initially] said they were going to give us a letter saying we were essential in case we got stopped or anything like that, for being out and about," the employee added.

An executive at a major North American supplier told Automotive News that it "would be normal" for Tesla to ask suppliers to produce parts next week in preparation for auto assembly to resume at its flagship plant in Fremont, Calif. on May 4.

A Tesla spokesman did not immediately respond to a request for comment from Automotive News on plans to resume production.

According to supplier AlphaUSA, Ford is starting production May 4. Ford has not made a decision on a date to reopen, according to a spokeswoman.

Ford began sending "modest" parts orders last week to ramp up for the first week of May, David Lawrence, chief administrative officer for the family-owned company told Crain's Detroit Business.

The suburban Detroit metal stamper plans to supply Ford from its inventory.

"We have inventory we were left with given the abruptness of the shutdown," Lawrence said. "What is on our shelves will cover customer requirements during the ramp up."

Lawrence said Ford's production demand doesn't really ramp up until the second week of May, after the Michigan stay-at-home order is set to expire.

The CEOs of GM, Ford and FCA have talked with Whitmer about ramping up for production in assembly plants next week, Walsh said.

GM has not announced a firm restart date, a spokesman confirmed. An FCA spokesman declined to comment, although the company's restart plans began to emerge last week.

"If you peeled back some banana peels, you'd find more and more people getting ready because they want to put their workers back to work, they need to get to work, they think they can do it safely and they've got a big giant hammer facing them from their worldwide OEMs," Walsh said.

But plants can't be restarted for immediate production, Walsh said.

"It's like heating up a furnace," he said. "You got to get it started gradually."

A spokeswoman for Michigan's governor had no immediate comment on the matter late Tuesday or Wednesday morning.

Though Faurecia stepped back on its planned restart, on Wednesday morning, more than 30 vehicles were parked in the main Faurecia employee parking lot in downtown Saline, and several vehicles were coming and going.

The employee said she was asked last week if she would be willing to report to work voluntarily as early as this week to start ensuring a smooth return to production, and that she declined.

A spokesman for the UAW told Automotive News that workers returning to Faurecia for Tesla were supposed to be volunteers and the company will be implementing safety procedures in the plant. He also repeated UAW President Rory Gamble's statement on members returning to work:

"I have said for some time that the only litmus test in reopening the economy is whether you would send your son or daughter into the workplace," the statement said. "UAW members are more than happy to return to the workplace under safe, monitored and healthy working conditions."

Negotiations between the UAW and the Detroit 3 over terms of restarting production have been ongoing.

A Faurecia spokesman said the company does not comment on customer production schedules, and could not comment further at this time.

The Saline ZIP code, 48176, had 57 reported cases of the virus as of Tuesday, April 21. The Faurecia spokesman said the plant in Saline has no confirmed cases of COVID-19.

"None of us want to go back, because we think that it's not safe yet," the employee said. "We don't want to be the guinea pigs."

Chad Livengood and Dustin Walsh of Crain's Detroit Business, Philip Nussel and Hannah Lutz of Automotive News, and Tran Longmoore of The Saline Post contributed to this report.