Production Across Italy's Auto Industry Slows as Nationwide Lockdown Bites
12 March 2020 - 3:01AM
Dow Jones News
By Jessica Sier
Italy's car industry is feeling the strain of the nationwide
lockdown to curb the spread of the coronavirus, while auto makers
elsewhere in Europe prepare to suspend production.
The Italian government's countrywide quarantine comes as a blow
to all industries, but especially the automotive sector, already
reeling from the closures of Chinese plants earlier in the month
and the dramatic selloff in global stocks.
Tire maker Pirelli & C. SpA, which operates three
manufacturing facilities in Italy and employs 13,000 people in
Europe, was forced to slow production after the company said late
Tuesday that an employee tested positive for the virus.
Days after the tire maker said the epidemic hadn't altered
operations, the company said its Settimo Torinese factory near
Turin would begin operating with a limited number of employees and
that a full sanitization of the plant would begin.
"Given this situation, the company has decided to slow down
production, with a progressive recovery in the coming days,"
Pirelli said. "This will permit the factory to operate with a very
limited number of employees and guarantee maximum safety in health
conditions."
Fiat Chrysler NV, which operates 16 facilities throughout Italy
and accounts for 4% of European Union vehicle production, is
bracing for plant closures in Pomigliano d'Arco, Melfi, Atessa and
Cassino and is already reducing daily production rates.
"To enable greater spacing of employees at their workstations,
daily production rates will be lowered to accommodate the adapted
manufacturing processes," the company said.
Both companies are encouraging staff to work from home if
possible.
Premium car maker Ferrari NV, with its manufacturing plant at
Maranello near Bologna, says production continues as scheduled,
though the company is also encouraging staff to work from home to
alleviate the number of people on the premises.
While Italian auto makers contend with the lockdown, companies
in Spain are preparing for similar production limitations.
Volkswagen AG subsidiary Seat, which owns the Martorell plant
outside of Barcelona and employs more than 15,000 people, is in
talks with union representatives on how to manage a potential
shutdown.
"Temporary layoffs are being considered if a lack of supply
forces the company to stop production for several days and the
flexibility measures in the collective agreement are not
sufficient," a company spokesperson said.
"To date, the Martorell plant is working normally, even so,
there are various risks arising from coronavirus, which has
affected the supply chain."
Global car makers are reliant on an elaborate web of supply
chains, from refining raw materials into parts to sourcing internal
electronics.
While Pirelli, Fiat Chrysler and Ferrari say they have enough
stock to carry on production for now, analysts are starting to
forecast further cuts in EU auto makers and their suppliers'
earnings for the first half of 2020, and revise their expectations
downwards for the rest of 2020.
Evercore ISI analysts have started to price in the chance of a
mild global recession, and cut global auto production expectations
down 4%, with as much as a 6% fall.
"We have been watching electronic components from Asia as a
primary concern and so far there are no supply-chain breaks but the
next few weeks remain critical," said Chris McNally, auto analyst
at Evercore ISI.
"But like all things in auto, they call it a global supply chain
because a single missing link in a chain of multiple thousands of
varied components means the chain can temporarily break," Mr.
McNally said.
Write to Jessica Sier at jessica.sier@wsj.com
(END) Dow Jones Newswires
March 11, 2020 11:46 ET (15:46 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Pirelli & C (BIT:PIRC)
Historical Stock Chart
From Oct 2024 to Nov 2024
Pirelli & C (BIT:PIRC)
Historical Stock Chart
From Nov 2023 to Nov 2024