Coronavirus Outbreak Could Affect Production at 2 GM Plants, Union Officials Say -- Update
February 14 2020 - 1:25PM
Dow Jones News
By Ben Foldy and Mike Colias
Union officials at two major General Motors Co. factories in the
U.S. are warning of parts shortages related to the coronavirus
outbreak in China, a sign that fallout for the auto industry's
global supply chain could soon touch U.S. shores..
A GM factory in Flint, Mich., which makes heavy-duty versions of
GM's Chevrolet Silverado and GMC Sierra pickup trucks, faces
shortages of at least two parts sourced from China, said Chad
Fabbro, a financial secretary at the United Auto Workers' local
representing workers at the plant.
In Arlington, Texas, GM's assembly plant is confronting the
possibility of running out of certain parts from China, said Terry
Valenzuela, president of UAW's local chapter. The situation remains
fluid, he added.
That factory makes large sport-utility vehicles that are
mechanically similar to pickup trucks, including the Cadillac
Escalade and Chevrolet Suburban.
GM said it doesn't anticipate an impact on truck production as
of now.
"We continue to monitor our supply chain and are in close
communications with our Tier One suppliers to mitigate any risk to
production in North America," the company said in a statement.
The outbreak of the novel disease, which health authorities have
named Covid-19, led China's government to impose extended shutdowns
of manufacturing plants throughout the country after the
traditional Lunar New Year holiday, in hopes of slowing its
spread.
Although many companies said they planned to restart plants this
week, analysts have stressed the impact of supply-chain
disruptions, and worker quarantines make it difficult to anticipate
when production will return to normal.
The outbreak has halted assembly lines at several car plants in
China. Forecasters at LMC Automotive expect the outbreak to depress
Chinese auto production by around 1.2 million cars this quarter.
Last year, GM produced nearly 640,000 cars -- nearly 40% of its
Chinese production -- in Hubei province, where the outbreak
originated and where most of the infections have been diagnosed,
the firm said.
The shutdowns have also affected factories making auto parts and
components. Shortages of China-made parts have already started
rippling through the global automotive supply chain, leading
Hyundai Motor Co. and France's Renault SA to temporarily idle some
assembly lines in South Korea.
The Flint factory is one of GM's largest in the U.S., employing
about 5,000 workers. It would likely run out of decals and vents
first, both of which can be installed after a near-finished truck
rolls off the assembly line, Mr. Fabbro said.
Longer delays could impact more critical components, he said.
"This is going to be a day-by-day monitoring thing," he said. "If
it goes six weeks, then we all have bigger problems."
GM has arranged for parts to be flown by chartered jet from
China when they are available, Mr. Fabbro said. A GM spokesman
declined to comment.
GM derives the majority of its global profit from sales of large
pickup-trucks and SUVs built in North America. The pickups are
built at the Flint factory, along with a plant in Fort Wayne, Ind.,
and another in Silao, Mexico. The Arlington plant makes all of GM's
large SUVs.
GM has been scrambling already to replenish truck stocks after a
40-day strike last fall that shut down production across its U.S.
factories.
Car companies have fortified their global supply chains in the
years since a tsunami in Japan in 2011 knocked out supplies of
certain components and led to cuts in vehicle production across the
globe.
Write to Ben Foldy at Ben.Foldy@wsj.com and Mike Colias at
Mike.Colias@wsj.com
(END) Dow Jones Newswires
February 14, 2020 13:10 ET (18:10 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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