Auto workers

businesses reopen, workers are still reporting difficulty getting unemployment benefits. Freelance, gig and self-employed workers are struggling.

Even the auto sector won’t see a full return to normal yet, and if people don’t start buying vehicles again, workers could be sent home. Yet automakers say there’s enough pent-up demand, especially for pickup trucks, to get factories humming again.

That could help states slow the drain on their unemployment benefit funds. In Michigan, where over one-third of the labor force sought benefits, the fund fell from $4.6 billion before the pandemic to $4.1 billion on April 30, said Jeff Donofrio, director of the state Department of Labor and Economic Opportunity. Some returning auto employees could work part time and still get some unemployment benefits, but federal programs could cover part of their payments, he said.

At Ford, where about 47,000 U.S. factory workers will return by next week, there’s optimism that consumer demand will accompany them. Chief Operating Officer Jim Farley said the company has seen sales start to recover.

Ford is predicting stronger sales in the future in Europe, China and the U.S. based on data collected from new models equipped with internet modems that show the number of times an engine is turned on and off. The company found a correlation between the number of trips people take and auto sales, with trips increasing as restrictions eased.

“We started to see in early April a change where people started to take more trips,” Farley said Thursday. “The (sales) decline stopped and our retail sales improved a lot.”

Auto sales in China could be a harbinger of things to come. China sales fell just 2.6% in April from a year earlier, compared with a 48% free fall in March. Production at many plants is nearly back to normal after being shut down in January and February. Volkswagen, Honda, Mercedes and Ford reported no virus cases among employees since reopening. Fiat Chrysler had two, but said the workers never entered factories.

Things are worse in Europe, where sales plummeted 55% in March and some factories are running at only 40% of capacity. The pandemic has affected over 1.1 million European auto industry workers, almost half the sector’s manufacturing jobs. Most are getting paid through government support. A survey of auto parts suppliers shows that a third of executives believe it will take at least two years for the industry to recover.

U.S. auto sales fell 46% in April compared with a year ago, but analysts are forecasting a smaller decline of 30% in May. Sales have been juiced by incentives, with offers of 0% financing for seven years. Government statistics show auto production dropped over 70% in April.

Pickup trucks are giving automakers the most hope, said Jeff Schuster, senior vice president at LMC Automotive, a consulting firm. From January through April, total auto sales were down 21%, but pickups were only off 4%, he said.

Yet Schuster says automakers could be too optimistic. “Those consumers who are still unemployed are not likely to be making auto purchases,” he said.

Some U.S. automakers, like General Motors, are restarting slowly, only bringing back workers on one shift in factories, some of which ran around the clock before the pandemic. Others, like Subaru in Indiana, have a full complement of employees.

Although companies are taking precautions, one big virus outbreak at an auto plant could send the industry back into hibernation. And the industry could face parts supply interruptions from Mexico, where the government wants to reopen factories despite rising virus cases.

Automakers in the U.S. are requiring employees to fill out questionnaires daily to see if they have symptoms, taking temperatures with no-touch thermometers before workers enter buildings, and requiring gloves, masks and face shields. They’ve also tried to keep at least 6 feet between workers, staggered time between shifts so workers don’t interact, and put up plexiglass barriers when possible.

All the steps were tested on U.S. workers who volunteered to make protective gear and breathing machines while they were laid off. Automakers say they know of no virus cases among workers in the effort.

Cindy Estrada, United Auto Workers vice president for Fiat Chrysler, said she has been impressed by the companies’ safety commitment.

“If something looks like it’s becoming a hot spot,” she said, however, “then we need to act quickly and make adjustments. No one wants to see that happen.”