COVID Impact - GM, Ford
Both General Motors and Ford shut down their manufacturing plants in the US to comply with government mandates relating to COVID-related social distancing and stay-at-home orders. GM sales declined by 34%, while Ford's sales declined by 33.3% in the second quarter of 2020.
- GM was forced to shut production operations at two of its key manufacturing plants. The two-month factory shutdown led to a squeezed supply chain leading to part shortages.
- The company also announced the cancellation of its scheduled overtime work at its SUV plant in Arlington, Texas. Its Corvette plant, which is located in Bowling Green, Kentucky, was put under a temporary shutdown.
- The shutdown of several of its auto plants led to record job losses and limited the supply of its vehicles to dealerships; thus, sales were hit hard. The company realized a 34% sales drop and announced its plans to cut 700 jobs at its Tennessee plant because of the drop in demand for SUVs manufactured there.
- All General Motors employees must go through a health screening that includes a temperature check and stand at least six feet apart to conform to social distancing guidelines. The company also uses apps to prevent infected people from reporting to work. Acting GM Chief Financial Officer John Stapleton stated that such steps to follow COVID-19 instructions have made it impossible to get back to normal production levels. As quoted, "Inventory levels will remain lower” than a year ago through at least the end of 2020."
- GM wanted to reopen its plant in Detroit on 18th May 2020, but the Michigan Government stay-at-home orders were still in effect, and this proved to be a major stumbling block in the resumptions of operations.
- Ford wanted to reopen its plant in Detroit on 18th May 2020, but the Michigan Government stay-at-home orders were still in effect, and this proved to be a major stumbling block in the resumptions of operations.
- The pandemic forced Ford to shut down its plant in Louisville, Kentucky, due to a shortage in Microsoft computer chips storage supply from Microsoft. This was predicted to spread to other auto plants in the following months.
- The global semiconductor(chips) shortage due to COVI-19 has led to Ford also closing down its Ohio Assembly Plant in Avon Lake.
- CNBC reported that Ford realized a 33.3% decrease in vehicle sales after shutting down factories and its dealerships due to COVID-19 in its second quarter, as this caused customers to stay home. Ford reported a 14.3% decline in retail sales in the second quarter. This also coincided with a 0.4% decline in truck sales and a 22% drop in SUVs.
- As a result of the depressed sales and production due to the COVID-19 pandemic, Ford was expected to realize a $2 billion net loss in its first quarter. The company also estimated a $600million pretax loss and a 16% revenue decline for the quarter.
- On 30th April 2020, Ford signaled that it was ready to commence production operations as soon as the stay-at-home orders are lifted. Jim Farley, Ford's chief operating officer, stated that"We've been working intently on how to restart our operations and safely bring back our employees, and we're ready."
- Social distancing guidelines are adhered to by ensuring that employees are six feet apart and go through temperature checks. All employees must wear masks. Before going to work, each employee must certify their health through an online form on a daily.