September 25, 2020

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    Fiat Chrysler is temporarily shutting four plants in Italy as coronavirus takes its toll on the world’s eighth biggest economy.

    The move came after a decision by the Italian government to impose sweeping restrictions on travel and public gatherings as it attempts to contain the worst outbreak of the coronavirus, also known as Covid-19, outside China.

    The Italian-American automaker stated Wednesday that plants will be closed and production rates decreased in order to support the nationwide campaign addressing the Covid-19 crisis.

    The closure of plants in Europe shows how the impact on the auto industry from coronavirus is becoming more worldwide. The pandemic has already resulted in extended factory shut downs and a clear drop in vehicle sales in China.

    A spokesperson for Fiat Chrysler stated the plants affected in Italy will be closed for the rest of the week to reduce the risk of contagion among workers. They are expected to restart on March 16.

    To limit contact among workers, the automaker stated it will increase space between workers at their workstations. This will require a modification to manufacturing processes and lead to lower daily production rates.

    Other ways to contain the spread of the virus consists of allowing some workers to work from home and controlling numbers at company cafeterias.

    Italy on Monday enforced widespread restrictions on travel and public life throughout the country, including closing schools, movie theaters, museums and gyms, and limiting opening time for bars, restaurants and shops.

    Economists state the measures are likely to push the nation’s already fragile economy into a sharp decline that will put Italian hotels, travel firm and restaurants under intense pressure.

    Global automakers have been dealing with supply chain disruptions following a coronavirus lockdown in China idled components providers and forced some automakers to temporarily halt production in the country.

    Volkswagen, the world’s largest automaker, stated Wednesday that nearly all its regions in China are producing again. Nissan was able to resume three of its plants in China last month. But two others — one located near ground zero for the virus in Hubei province and the other in neighboring Henan — are only expected to resume later this week.

    A decline in demand in China has threatened to push the market deeper into recession. Passenger vehicle sales in China, the world’s largest market for cars, dropped 92% in the first half of February.

    The emergence of a huge number of coronavirus cases in Europe threatens another major sales and production hub for global automakers.

    European automotive industry is highly integrated, with supply chains that cross multiple nations. Germany is home to Volkswagen, BMW and Daimler. Renault and Peugeot, which is going through a merge with Fiat Chrysler, are based in France.

    If France and Germany are forced to follow Italy in imposing sweeping restrictions to contain the spread of coronavirus, automakers will be in for much more pain.

    A spokesperson for Volkswagen stated that its plants outside China are working “without any significant restrictions”. But the company, which owns Lamborghini, stated it’s closely watching the situation in Italy.


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