Via Financial Times

As dawn broke on Tuesday, more than 2,000 factory workers arrived at Magna Steyr’s plant in Graz, Austria, for the first time in a month.

The staff, who assemble the luxury Mercedes G-Class wagon for the contract manufacturer, were given two face masks on arrival.

Sitting spaced apart on the floor of the car plant to avoid crowding one of the meeting rooms, they listened to an hour-long briefing on the health measures put in place across the facility, from the new wash stations to the cardboard partitions that separate lunch benches.

In the coming days, the scene will be replicated across a smattering of facilities from Sweden to France to Germany, as the first of Europe’s halted car production lines begin moving again after weeks of silence, while closed US sites are likely to follow suit in the coming weeks.

After deciding to close down in March to contain the outbreak — and because of a collapse in demand and stoppages in the supply chain — carmakers including Toyota, Volkswagen, Volvo, Renault and Hyundai are firing up factories again, while trying to keep their workforces safe.

“It’s easy to shut down, it’s much more complicated to open up,” said Hakan Samuelsson, chief executive of Volvo Cars, which will open its Torslanda site in Sweden and its Ghent plant in Belgium on Monday.

Yet while all carmakers say they are committed to protecting workers, there are subtle differences in their approach as each one tries to balance the efficiency of their sites with the wellbeing of their staff.

“You have to watch for the health of the people, but also the health of the company,” said Frank Klein, Magna Steyr’s manufacturing head. “People are happy to be off for two weeks, but they all know that if the shutdown is too long there is always a risk to jobs.”

READ ALSO  American entrepreneurs wade into murky Syrian oil business
Volvo Cars will reopen its Torslanda site in Sweden on Monday © Volvo Cars

With the pandemic spreading in March, some North American plants were hit by staff walkouts over safety concerns. The new protective measures are being introduced in consultation with unions.

“Safety of health is a key priority,” said Johann Neuhold, the leader of the works council at Magna Steyr in Graz. “But nevertheless the safety of jobs should not be underestimated in these times.”

The assembly line at Hyundai’s plant in the Czech Republic, which reopened this week, will run at a slower speed to allow workers to keep their distance.

Normally an employee moves along the line with the car while completing their task, such as installing the dashboard.

With speeds reduced, staff will carry out the same task but will travel less distance, keeping them within a smaller area and further apart from the next workstation.

Ferrari, which has not reopened but is preparing to start up once cleared by the Italian government, has two staff on a car at any time, and will require all workers to remain at diagonally opposite ends of the car from their partner.

Line chart of Rolling 12-months, units (m) showing European car sales slump on lockdown measures

The company, which has the luxury of slower production than mass-market manufacturers, normally produces 48 cars a day from three lines, but will restart at lower volumes to limit the number of staff at the site.

Fiat, which is waiting for the green light to open, will also use slower lines once given the all-clear.

These measures will ultimately slow the number of vehicles produced. But for a global economy buckling under the disruption wrought by coronavirus, analysts say that is not necessarily an immediate problem.

“You can run the plant like this though it obviously wouldn’t be as efficient,” said Tim Lawrence from PA Consulting, who advises carmakers on manufacturing and supply chains. “You might lose 20-30 per cent of your efficiency, but if demand falls then output will have to come down anyway.”

READ ALSO  The stock market is at or near the most-expensive levels ever by most measures. When will it matter?

Car sales in Europe fell 55 per cent in March, and are expected to drop further in April when the full impact of the lockdowns in big markets bites.

Scatter plot scowing Jobs and output (’000) and showing how Coronavirus hits Europe's car industry

Others have rejected the running-slow approach. Volvo plans to restart its main Swedish factory at “full speed” and control output by limiting hours instead, something that requires workers on its assembly line operating close together as usual.

“We will always work at full speed when we work, that’s how you manage a modern assembly factory,” said Mr Samuelsson.

Workers will wear masks and gloves, and be advised to wash hands frequently at the newly installed basins and sanitising points. Temperature tests at the site entrance are voluntary. 

While the approach may appear lax compared with the distancing measures other carmakers are introducing, it echoes the Swedish mentality of individual responsibility, which has seen the country keep some schools and restaurants open while other nations have been in complete lockdown.

Workers on their lunch break are separated by cardboard partitions at the Magna Steyr plant
Workers on their lunch break are separated by cardboard partitions at the Magna Steyr plant © Ritz Photography

Other carmakers are restarting at speed because of the complications of reorganising their factories.

“We had a long discussion about it,” said Mr Klein at Magna Steyr, which builds models for Jaguar, BMW and Toyota as well as Mercedes.

Any change to production also meant retraining workers, while keeping complete distance was “unrealistic”, he said.

“People have to walk to pick up parts, have to move along the assembly line, you will always run into other people. That’s why we make it mandatory for people to wear masks.”

The company has taken other measures to minimise staff contact, with each other and with people outside the factory.

Workers are required to come to the factory already in their overalls, to avoid crowding the changing rooms. Once it reopens the Jaguar and BMW lines next month, in an effort to encourage staff to avoid public transport, Magna Steyr will add car parking by using space normally allocated to completed cars. 

READ ALSO  GameStop shares leap as day-trading ‘mob’ tussles with short seller

In addition, staff are asked to bring packed lunches, while Magna contacted its packaging supplier to provide large cardboard partitions for the lunch areas.

Partitions for workers in the Hyundai canteen
Partitions for workers in the Hyundai canteen

Hyundai has also transformed its canteen with plastic panels, creating a network of booths for workers to eat in isolation.

It will also sanitise its site between two shifts, which have been spaced further apart to allow cleaning.

Toyota will reopen two French plants next week, with all doors held open to avoid using handles. Where not possible, door handles will be fitted with devices that allow staff to open them with elbows.

Other measures include reorganising smoking breaks to avoid worker crowding.

Almost all of the companies test temperatures of staff entering and leaving the site, while Ferrari also has a sanitising mat for visitors to clean their shoes.

The Italian supercar maker also intends to use a local hotel to house any staff — and their families — who develop symptoms.

Ultimately, carmakers are being forced to restart production to recoup losses made during the shutdowns.

VW, which on Tuesday said first-quarter profits fell 80 per cent, has been paying €2bn a week in fixed costs while its European factories are offline.

“It’s an enormous influence on our bottom line, the big volume drop and we did everything to reduce fixed costs,” said Volvo’s Mr Samuelsson.

“But we cannot have shutting down as the long-term solution. We cannot wait for a vaccine, so we have to learn to live and work in a safe environment.”