The federal government may freeze your car payments, automakers are shifting production to health equipment for Coronavirus relief, dealerships aren’t sure if they should stay open, we don’t know where to park all the planes, and a lot more in The Morning Shift for Tuesday, March 24, 2020.
A new $2.5 trillion stimulus proposal from U.S. House of Representatives Speaker Nancy Pelosi, the third version of a bill originally introduced by Republican leadership and rejected by Democrats, now includes more progressive and stricter guidance on corporate economic relief while attempting to ease financial pressure on the working class, including temporarily suspending car payments.
Here’s more details on the current version of the bill, which is still actively being negotiated this morning, from Automotive News:
Pelosi’s 1,400-page bill would have broad implications for the financial sector. It would force lenders to grant a temporary reprieve from mortgage and car payments and credit card bills. It would order the Federal Reserve to provide loan servicers with liquidity to allow borrowers to stop paying their mortgages for up to 360 days. Public housing residents would get a temporary reprieve from paying rent, and student loan borrowers would have $10,000 of debt forgiven.
Negative consumer credit reporting would be halted. Foreclosures and evictions would be banned.
The Pelosi proposal is a response to a Republican version which was blocked for lacking oversight and transparency in its corporate loan programs. This current version is already being knocked by Republicans, though, again from Auto News:
“People are sick, families are frightened, our economy has ground to a halt, and workers face unprecedented job loss,” House Republican leader Kevin McCarthy said in a statement. “Democrats are using this national crisis to hold relief hostage unless Congress mandates corporate board diversity requirements and major components of the Green New Deal which will kill American jobs.”
I don’t know, Kevin. Urging people to go back to work in a time of a pandemic and then being worried about paying them a living wage seems a little too feudal, in my opinion.
As automakers wind down U.S. car production and send workers home amid the COVID-19 emergency, companies like Ford and Fiat Chrysler are shifting their production capacity to manufacturing health supplies like ventilators, respirators, and face shields to make up for shortages.
Ford announced today it’s partnering with 3M and GE to manufacture supplies, from Automotive News:
The automaker Tuesday said it will use fans from F-150 pickup seats, portable tool battery packs and 3D-printed parts to quickly assemble disposable air-purifying respirators alongside 3M at its advanced manufacturing center near Detroit in Redford, Mich.
Ford said it initially would be able to make up to 1,000 respirators per month, helping 3M boost production of them tenfold.
In addition, Ford plans to produce up to 100,000 face shields per week, also in Michigan. Roughly 75,000 of these shields are expected to be finished this week, and more than 100,000 face shields per week will be produced at Ford subsidiary Troy Design and Manufacturing’s facilities in Plymouth, Mich.
Ford also is partnering with GE Healthcare to expand production of a simplified version of GE’s ventilator design. Ford said the ventilators could be produced at a Ford manufacturing site in addition to a GE location.
FCA will pump out a million face masks, as well, from Reuters:
FCA, which is also trying to help produce badly needed respirators for patients in intensive care in Italy, is one of a number of large manufacturers adapting production lines to make products in desperately short supply.
“Production capacity is being installed this week and the company will start manufacturing face masks in the coming weeks with initial distribution across the United States, Canada and Mexico,” it said in a statement released late on Monday.
The monthly output of one million masks will be donated to police, emergency medical staff, firefighters and to workers in hospitals and health care clinics, it said.
And Tesla CEO Elon Musk shipped ventilators from China to help avoid a shortage in Los Angeles, from Auto News:
The billionaire said in a tweet he helped acquire 1,255 of the machines from China last week and arranged for them to be air-shipped to Los Angeles. He thanked Tesla staff and customs officials in China and Los Angeles for assistance.
Musk’s initial reaction to Coronavirus was skeptical, with him even making dangerous assumptions about how susceptible children were to the virus and initially downplaying the possibility of a ventilator shortage. As frustrating as that was at the time, it’s good to see he’s now using his power to help, not just get in the way.
It’s important to recognize that many other automakers, including General Motors and not just the three listed above, are also looking into shifting production to medical supplies and other relief efforts.
Automotive dealerships are seeking clarification over what exactly are considered “essential services,” a distinction needed to remain open for business under the White House’s March 19 guidance for slowing the spread of Coronavirus in the U.S. with social distancing.
While the White House’s initial guidance clearly outlined vehicle and supply manufacturing and maintenance and repair facilities as essential services, dealerships aren’t sure whether they’re still meant to be selling cars. From Auto News:
“The guidance made no reference to vehicle sales and lease operations that are typically conducted by franchised new-car and -truck dealers in conjunction with their service and maintenance operations,” the letter said. “As a result, some states and other jurisdictions have prohibited vehicle sales by dealerships.”The trade groups are urging the president to amend the previously issued guidance and asking that any future executive order include the sale of light-, medium- and heavy-duty vehicles by dealers as an essential service.“A significant number of dealership sales transactions occur because a consumer or business is in immediate need of a replacement vehicle for basic transportation,” the groups argued in the letter.The groups said various transit services, specifically, have been reduced or eliminated because of the public health recommendations for social distancing.
While I’m not sure there’s a huge demand for car buying amid the current hellscape of economic doom and viral pandemic, American society and infrastructure has been designed around the car, making the car essential for transport and, as the groups say above, making car buying essential along with it, even in the worst of times. I’m sure you’ll be able to go out and get a great deal on an Escalade if you need to.
Just maybe take the test drive alone to maintain appropriate social distance with the salesperson.
As China slowly begins to recover from the outbreak of Coronavirus as the rest of the world just begins to tackle the issue, some much needed global manufacturing relief is coming back online. From Auto News:
Daimler has reopened its factory in China, where demand for vehicles is recovering, CEO Ola Kallenius told a German newspaper.
“The vast majority of our dealerships have reopened, the customers are returning,” Kallenius told Handelsblatt. “Every day more people come to the car dealerships. Demand is picking up, which makes us optimistic.”
Earlier this month Volvo Cars reopened its four manufacturing plants in China after an extended closure period to cope with the virus outbreak.
The automaker said that current showroom traffic indicates a return to normal in China’s car market. Volvo makes vehicles in Chengdu, Luqiao and Daqing and builds engines in Zhangjiakou.
Another positive sign is that Volvo subsidiary Polestar started production Tuesday of its first volume model, the Polestar 2, in Luqiao.
While this is hopefully a positive indication that the rest of the world will be able to recover from COVID-19 just as quickly, now there’s a new production problem. The global factories Chinese suppliers normally supply either previously stockpiled out of concern for the duration of the Chinese production shutdown, or are now out of operation due to the latency of the virus spreading worldwide:
On the supplier side, German roof specialist Webasto has resumed production at all 11 of its plants in China. “But due to the still-limited demand from customers, capacity utilization is currently only around 60 percent. This is partly due to the high warehouse stock held by OEMs,” Chairman Holger Engelmann said in a statement sent to Automotive News Europe.
French supplier Faurecia said all its factories in China have resumed production in the past week. Francois Tardif, vice president for China, told financial newspaper Les Echos on Tuesday that it was now at about 70 percent of typical production. “Our production in China is returning to normal,” he added.
Andreas Wolf, CEO of Continental’s soon-to-be-spun-off powertrain arm, Vitesco Technologies, told ANE “things are already getting back on track in China.”
Swedish radar and vision systems supplier Veoneer, which was spun off from airbag maker Autoliv in 2018, said its factories are running at about 85 percent capacity.
Still, if even some global markets rebound as quickly as China is expected to based on early indicators, like South Korea, it will hopefully be enough to return to a global supply and manufacturing network that’s closer to normal than some anticipated this early, which is a very good thing.
With a minimization of travel now the key defense against COVID-19, airlines are cutting flights and idling thousands of aircraft, presenting a new problem of where to park everything.
Taxiways, maintenance hangars and even runways at major airports are being transformed into giant parking lots for more than 2,500 airliners, the biggest of which takes up about as much room as an eight-story building with a footprint 3/4 the size of an American football field.
The number of planes in storage has doubled to more than 5,000 since the start of the year, according to Cirium data, with more expected to be parked in the coming weeks as carriers like Australia’s Qantas Airways Ltd and Singapore Airlines Ltd proceed with further announced cuts to flight schedules.
Even some smaller airports have been converted to parking lots. Avalon Airport west of Melbourne expects to take 50 planes from Qantas and its low-cost offshoot, Jetstar, according to the airport’s chief executive, Justin Giddings.
The planet gets to take a breath of fresh air from one of the biggest pollution industries taking a break, but hopefully the tens of thousands of airline workers now unsure about their future get relief sooner than later.
Exxon itself was condemned by the National Transportation Safety Board and in early 1991 agreed under pressure from environmental groups to pay a penalty of $100 million and provide $1 billion over a 10-year period for the cost of the cleanup. However, later in the year, both Alaska and Exxon rejected the agreement, and in October 1991 the oil giant settled the matter by paying $25 million, less than 4 percent of the cleanup aid promised by Exxon earlier that year.
The ship’s captain was drunk. Maybe we need driver awareness sensors on ships.
As we all stare down the barrel of one of the greatest crisis in American history, where are you hoping to find relief? And what should we do for those who may not be able to afford car repairs or replacement purchases in such hard times? Are we headed for Cash 4 Clunkers 2, 2 Cash 2 Clunker?