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The delta variant of the coronavirus is wreaking havoc in the auto world, shutting down the New York International Auto Show just days before its scheduled opening, forcing auto workers to return to wear masks on chains assembly and threatening to impact vehicle production.
Scheduled for August 20-29, the auto show was canceled Wednesday morning, officials citing “the growing incidence of the delta variant of Covid-19 and the increased measures recently announced by state and local authorities to stop its spread “.
New cases along the assembly line threaten to affect vehicle production in the United States and, in turn, the Big Three of Detroit automakers have reinstated mask mandates for hourly workers, in the hopes to contain the spread of the virus variant.
Automakers are hoping to avoid the kind of disruptions the industry faced last year, which has caused demand, production and profits to drop sharply.
The move was announced by the Covid-19 task force set up last year by General Motors, Ford and Stellantis (formerly Fiat Chrysler Automobiles). It comes as the operations of several factories, including a GM facility in Missouri, have been disrupted by the acceleration of Covid infections.
Automakers are hoping to avoid the kind of disruptions the industry faced last year, which has caused demand, production and profits to drop sharply. But, even if they can run factories, the impact of the pandemic is expected to be felt for some time, in part due to the shortage of semiconductor chips it has sparked.
Domestic automakers aren’t the only ones worried about the Delta variant’s worsening balance sheet.
“This is a reality we are facing, with the latest news from Covid,” said Chris Reynolds, chief executive officer of Toyota Motor North America. “Like everyone else, we thought things were starting to improve. But the Delta variant, you know, really affects everyone, including Toyota. “
In a statement released Monday, the United Auto Workers Union said: “While we know masks can be uncomfortable, the spread of the Delta variant and recent data describing the alarming rate of transmission among unvaccinated people is a serious threat to health. The union is part of the Covid task force and has accepted its recommendations on masks.
Some foreign manufacturers have also reinstated their own mask mandates. Others are reconsidering their plans to bring the workers back after having had them operated at home since early spring 2020, NBC News confirmed.
“At our headquarters in California, we have temporarily delayed the next phase of our back-to-office plan,” said Michele Tinson, Midwest and East Coast spokesperson for Hyundai Motor America. “Across all of our facilities, we continue to closely monitor case counts, regulations and guidelines to determine the right approach to ensure the safety and health of our employees. “
The auto industry has been hammered by the coronavirus pandemic since its early days. Chinese factories began temporary shutdowns in early 2020, factories in Europe will follow shortly thereafter. The entire North American auto manufacturing network closed in mid-March and did not begin a gradual reopening until two months later.
When factories closed 17 months ago, automakers canceled orders for critical parts and components. Semiconductor makers quickly found alternative customers in the consumer electronics industry with orders for smartphones, video cameras, and game players as the world froze.
As vehicle production rebounded, “automakers found themselves at the back of the pack,” said Joe Phillippi, director of AutoTrends Consulting. Like many analysts, he doesn’t see automakers being able to get fully-filled chip orders until the end of this year, possibly even until 2022.
But by reducing incentives and raising prices, Q2 2021 profits have been reasonably strong. Nissan was in the dark after initially reporting it could suffer a loss. Ford posted better numbers than CEO Jim Farley warned earlier, and Stellantis posted a strong first-half net profit of $ 7 billion, down from a loss of $ 965.4 million the year before.
The big question is what happens in the future. The challenge, Reynolds said, is finding ways to stop Covid from winning.
“We have always told our teammates that the virus is running the show here,” he said.
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