Fiat Chrysler Posts Big Loss, Eyes Production Restart ASAP
The first quarter of 2020 spilled a tsunami of red ink over Fiat Chrysler’s balance sheet, with the automaker posting a $1.84 billion net loss.
FCA seemed to be the canary in the coal mine when it came to the coronavirus, as the automaker was forced to idle an assembly plant in Europe even when the pandemic was still a regional outbreak in China. Where did the virus then take hold? In Italy, of course — FCA’s European base of operations. You know what came after that.
Seemingly more so than its Detroit rivals, FCA has been eager to get factories back up and running, and the Q1 earnings report only adds to its desire for something approaching normalcy. The folks in Auburn Hills want to open things up starting May 18th.
After having its initial May 4th phased restart kiboshed by government and union pressure, FCA now wants to start gradually opening up its North American plants as soon as Michigan’s stay-at-home order ends, independent of any unified proclamation with General Motors and Ford.
Again, it could face roadblocks in the form of the state of Michigan, where Gov. Whitmer recently extended the state’s emergency orders until May 28th, and but not from the United Auto Workers, which appears on board. Each member of the Detroit Three claims to have extensive new health protocol in place to minimize viral risk to employees. The situation, especially in Michigan, is still a dangerous one, the UAW claims.
From The Detroit News:
North American plants will ramp-up progressively starting the week of May 18 except for Belvidere Assembly in Illinois, which will begin by June 1. Additional safety procedures may require a reduction in jobs per hour, the company said, and it will align production with consumer demand. Electrified, high-margin and low-inventory vehicles will take precedence.
Since the outset of the pandemic, “FCA’s first priority has been the health and safety of its employees and communities,” CEO Mike Manley stated in FCA’s Q1 earnings report.
“The pandemic has had, and continues to have, a significant impact on our operations. With our experienced leadership team and dedicated employees, I have the utmost confidence in our ability to navigate through this crisis and emerge well positioned to grow and prosper on the other side.”
FCA’s net profit in the previous quarter topped $2.9 billion. How quickly things can change. While the automaker’s manufacturing base in Italy is just now starting to open up, and despite plans for a North American return to production, FCA anticipates a far worse Q2 on the horizon (not unlike rival Ford, which recently posted a similar Q1 loss).
UAW President Rory Gamble weighed in on FCA’s plans, just days after announcing that a restart wasn’t safe.
“The UAW has and continues to have dialogue with all of our employers and employment sectors about the safety and security surrounding reopening worksites,” he said in a statement.
“In the case of the Big 3, through the Task Force we have had an ongoing dialogue and we have supported a number of measures put in place to address Center for Disease Control (CDC) and World Health Organization (WHO) guidelines from FCA, GM and Ford to protect our health and safety in the plant. Our volunteer members and the companies have done great work to reconfigure plants to achieve this safety goal.”
Sounds markedly different from the release UAW put out ahead of FCA’s tentative May 4th reopening. Certainly, there’s an air of inevitability about it all — something Gamble himself addressed:
“We continue to advocate for as much testing as possible at the current time and eventually full-testing when available,” said, adding, “As for the start date, the companies contractually make that decision and we all knew this day would come. Our UAW focus and role is and will continue to be, on health and safety protocols to protect our members.”
With the UAW on board, Michigan’s governor becomes the last potential hurdle. The state’s stay-at-home order expires on May 15th and, despite the extension of Michigan’s state of emergency through May 28th, that particular declaration does not cover manufacturing facilities. However, any setback on the virus front could see stay-at-home return.
[Images: Fiat Chrysler]
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