DETROIT _ Now that the Detroit Three auto companies have restarted factory operations in North America on Monday, they’re monitoring closely new reports coming from Mexico about whether auto suppliers there will be crippled by the coronavirus.
Industry analysts say what happens in the next two weeks will be crucial to Detroit.
“The U.S. car assembly plants have some inventory but not enough to last more than two weeks,” said Patrick Penfield, a supply chain management professor who teaches at Syracuse University in New York.
“The biggest issue U.S. car assembly plants face in the next two weeks is that the coronavirus infection rate is starting to surge in Mexico,” he said. “If the Mexican government changes their decision on restarting manufacturing on June 1st and continues their factory closures, U.S. car assembly plants will also shut down due to a lack of components.”
Statements from government officials in Mexico have been inconsistent, suggesting as recently as late Thursday that the industry would be shuttered until June 1. Then President Andres Manuel Lopez Obrador issued a directive Friday that seemed to green light Detroit automakers plan to restart production Monday.
“It appears the Mexican Ministry of Health has clarified its guidance, and automotive manufacturing can begin again (there) before June 1 if they have approved process to meet health protocols,” said Kristin Dziczek, vice president of Industry, Labor & Economics at the Center for Automotive Research in Ann Arbor.
“This is good news, but the uncertainty weighs heavily on the auto industry as Mexico is a critical part of the U.S. automotive supply chain,” she said.
Jeoff Burris, founder of Plymouth-based Advanced Purchasing Dynamics, a supply chain consultant to auto suppliers primarily in North America, said the confusion is magnified as it is cascaded down the supply chain.
“Suppliers to the assembly plants and their suppliers are telling us that they are not getting good direction from electronic systems regarding parts that will be required and when they will be required. That the mass layoffs in the industry is making it almost impossible to connect to real people to sort out issues,” he said.
Auto companies are counting on a buffer created by inventory already in the supply chain when it shut down, and the slow ramp-up of the vehicle assembly plants.
In Mexico, like in the U.S., safety protocols are essential to reopening.
“Companies or industries engaged in activities considered essential, must present sanitary security protocols in accordance with the general guidelines established by the Secretaries of Health, Economy and Labor and Social Welfare,” said the Mexico government directive issued Friday. “The presentation, application and approval of the protocols … may take place at the same time that the preparation measures for the entry into operation of the companies are carried out.”
GM, Ford and Fiat Chrysler have worked with the UAW to implement safety strategies in response to the pandemic and in an attempt to slow its spread.