American Carmakers Need To Get Their Story Straight On Coronavirus

Dearborn Truck Assembly on the day of the restart, May 18.
Dearborn Truck Assembly on the day of the restart, May 18.
Photo: Getty Images
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The Big Three reopened their assembly lines last month, and stories have been rolling in on new cases and plant shutdowns since then. But the auto industry now is trying to take a victory lap over “no major outbreaks,” as Reuters reports. All that and more in The Morning Shift for Thursday, June 18, 2020.

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1st Gear: Reuters Reports ‘No Major Outbreaks’ Days After UAW Asks GM To Shutter Plant Over New Cases

Just a few days ago GM was refusing to shut down a plant amid UAW demands for safety. The union was claiming 20 cases.

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And it was just a few days into the restart that at least three people tested positive for COVID-19 at Ford.

But today, for some reason, Reuters is reporting that there have been “no major outbreaks” since the Big Three’s restart, citing but not quoting automakers and the union. Here is the main part of it, as posted in the New York Times business section:

DETROIT — Automakers are speeding up U.S. assembly lines to meet recovering demand, increasingly confident coronavirus safety protocols are working to prevent outbreaks in their plants but wary of the challenges workers face outside.

Screening workers for COVID-19 using temperature scans and questionnaires, the automakers have detected some people who reported for work despite being sick. Some plants have been briefly shut down for disinfection, but so far, there has not been a major outbreak within a U.S. auto plant since most reopened May 18, company and United Auto Workers union officials said.

The piece goes on to warn that coronovirus “could” cause shutdowns at plants if it broke out, which is strange, because those aforementioned cases at Ford did bring the company to shut down for cleaning.

Here’s how the news spun it at the time, per CNBC:

“It’s not a matter of necessarily creating a condition where it’s impossible for anyone to get sick,” said Stephanie Brinley, principal automotive analyst at IHS Markit. “What they’re creating is an environment with which to handle it if something does happen, and to handle it quickly.”

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I think the most charitable read of all of this is that we’re starting to accept some new cases as fine, as long as it’s not, I don’t know, dozens, hundreds, thousands of cases.

2nd Gear: Closing Lordstown Broke Ohio Deal And GM May Pay Back $60M In Public Incentives

Remember when GM “unallocated” Lordstown because its union contract precluded it from closing the plant? That was so weird! Anyway, careful language or not, the plant is closed and the state of Ohio is asking for its money back, as the Associated Press reports:

Ohio officials are considering forcing General Motors Co. to repay $60 million in public incentives because of its decision to close a massive assembly plant near Youngstown.

At issue is an economic development deal from more than a decade ago that gave GM millions in tax breaks in exchange for a promise to keep the Lordstown plant operating at least through 2027.

State officials notified the automaker in March that the plant’s closing last year violated the agreement, The Business Journal in Youngstown reported this week.

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All of this was just so that GM could stop making the Cruze, which will probably prove unwise when our economy collapses in about five minutes and people want affordable cars again.

3rd Gear: Tesla Is Getting Sued Over Elon And Other Execs’ Compensation Packages

I have no desire to make any judgment one way or another on financial matters at Tesla, particularly when it comes to pensions or stocks or anything, because all financial matters like this feel scammy and make me dream of car companies operating without shareholders at all, but I will pass this news story along from Bloomberg.

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It’s running under “Elon Musk, Tesla Board Sued by Pension Fund for ‘Unrelenting Avarice’” and reports on Tesla getting sued for exec compensation:

Tesla Inc. directors, including co-founder Elon Musk, awarded themselves massive compensation packages over a three-year period that improperly siphoned hundreds of millions of dollars out of the electric carmaker’s coffers, a pension fund invested in the company alleges.

The directors — including Oracle Corp. founder Larry Ellison, James Murdoch, son of media mogul Rupert Murdoch, and Musk’s brother, Kimbal Musk -– wasted corporate assets in granting themselves some of the highest director pay awards among U.S. corporate boards, a pension fund representing Detroit police and firefighters said in a lawsuit filed Wednesday in Delaware.

Tesla’s board members used their positions to “enrich themselves at the company’s expense,” lawyers for the pension fund said in the 78-page complaint. “They have granted themselves millions in excessive compensation and are poised to continue this unrelenting avarice into the indefinite future.”

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Business reporters will pop veins when they read this but executives using their positions to “enrich themselves at the company’s expense” is pretty much how capitalism really works.

4th Gear: Mitsubishi Execs Are Taking Pay Cuts At This Point

Meanwhile at the struggling Mitsubishi, cost cuts are going all the way up the chain, as the Associated Press reports:

Mitsubishi Motors told its shareholders Thursday that its top executives are taking pay cuts to share responsibility for the automaker’s financial losses.

“I hope we can gain your understanding,” Chief Executive Takao Kato said on how, given the harsh conditions, there will be no dividends.

Like other automakers, Mitsubishi Motors Corp. has seen its sales plunge amid the coronavirus pandemic. It reported a ¥25.8 billion ($241 million) loss for the fiscal year ended in March.

[...]

Kato said the executives’ pay cuts amount to about 45 percent of their overall pay by lowering salaries and foregoing performance-linked bonus pay.

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All of this could have been avoided if Mitsubishi simply sold the Delica in the United States. Probably. Maybe.

5th Gear: Fiat-PSA’s $50B Merger Is Getting An Antitrust Probe Over… Small Vans?

I was not surprised to see news that the FCA-PSA merger is in the midst of an antitrust probe. What did surprise me was what it was over: small commercial vans! This is the most European thing ever, as the Financial Times reports:

Brussels has opened an in-depth antitrust probe into the $50bn merger of Fiat Chrysler and France’s PSA amid concerns that the deal “may reduce competition” in the lucrative small commercial vans market.

The second-phase investigation was launched on Wednesday after the two carmakers failed to offer any concessions to the European Commission to assuage worries over their potential dominance in the market. 

[...]

Although the carmakers have a joint venture producing vans in the region already, the vehicles compete with each other on the forecourts, the commission argued.

“In many countries, either PSA or FCA is already the market leader in light commercial vehicles, and the merger would remove one of the main competitors,” it said.

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I appreciate that Europe takes the issue of small vans seriously, as I have also in all the years I waited for the Nissan S-Cargo to become legal in America under the 25 Year Rule.

Reverse: I Didn’t Realize NASA Advertised In The Newspaper

Via History:

On June 18, 1983, the space shuttle Challenger is launched into space on its second mission. On board the shuttle is Dr. Sally K. Ride, who as a mission specialist, becomes the first American woman to travel into space.

Ride, who had earlier pursued a professional tennis career, answered a newspaper ad in 1977 from NASA calling for young tech-savvy scientists who could work as mission specialists.

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Neutral: How Many Coronavirus Cases At Your Work Would Be A ‘Major Outbreak?’

If anyone showed up to work with covid, I would be out of there, but my office at the moment is my living room.

Raphael Orlove is features editor for Jalopnik.

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DISCUSSION

4th Gear:

foregoing performance-linked bonus pay.

Who the hell at Mitsubishi is getting performance bonuses? How low is that bar?