Fiat Chrysler Automobile... (NYSE:FCAU)
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By Ben Foldy in Detroit and Eric Sylvers in Milan
Fiat Chrysler Automobiles NV said it is temporarily halting production at a car factory in Serbia because it can't get parts from China, a sign of how the coronavirus outbreak is creating a domino effect in a straining global supply chain.
At the same time, union officials at two major General Motors Co. factories in the U.S. are warning more production outages could come as certain parts at SUV and truck plants in Michigan and Texas run low.
Fiat Chrysler's planned shutdown next week at a factory in Kragujevac, Serbia, is the first publicly disclosed closure of a large car plant outside of Asia. Shortages of China-made parts have already begun to ripple through the global automotive supply chain, leading Hyundai Motor Co. and France's Renault SA to temporarily idle some assembly lines in South Korea. Nissan Motor Co. has had to adjust production at some of its plants in Japan because of problems getting parts from China.
Fiat Chrysler said it was moving up a planned shutdown previously planned for later in the month at the factory, which makes the Fiat 500L sedan. The factory, Fiat Chrysler's only one making the 500L, has more than 2,000 employees. That stoppage had been scheduled to adjust production to slumping demand. The company said it didn't expect the change in scheduling will impact its total monthly production. Fiat Chrysler said it is working to get the parts, which it declined to identify, from other suppliers. It declined to comment further.
Closer to home, a 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 said. That factory makes Cadillac Escalades and Chevrolet Suburbans.
GM said it doesn't anticipate an impact on truck production for 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 car industry is in a supply chain twilight zone right now," said Warren Browne, a former car industry executive who now works as a consultant. "If you know it's going to last six or seven months you start moving production around. If it's going to be six weeks you don't move anything because it's not worth the trouble."
The outbreak of the disease that health authorities are now calling Covid-19 led China's government to impose extended shutdowns of manufacturing plants throughout the country after the traditional break for the Lunar New Year holiday, in hopes of slowing the disease's spread.
Many auto companies said they planned to restart plants in China this week. It is unclear how many have. Analysts say 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, and 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, the origin of the outbreak where most of the infections have been diagnosed, LMC Automotive said.
The factory in Flint is one of GM's largest U.S. factories, employing about 5,000 workers. The plant 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. But 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 parts are available, he said. A GM spokesman declined to comment.
GM derives the majority of its global profit from sales of its large pickup-truck and SUV models 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.
The company already is trying to replenish truck stocks after a 40-day strike last fall shut down production across its U.S. factories.
Mike Colias contributed to this article.
Write to Ben Foldy at Ben.Foldy@wsj.com and Eric Sylvers at email@example.com
(END) Dow Jones Newswires
February 14, 2020 15:13 ET (20:13 GMT)
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