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Toyota, VW Balk on U.S. Production Plans

Uncertainty about COVID-19 and supply chains cloud decisions
#dealers #facilities #Toyota

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You can’t play ball until the team is ready to go.

Which, apparently, is the problem in the U.S. for Toyota and Volkswagen plants idled by the coronavirus pandemic.

May Plans

Toyota had planned to reopen its factories in North American beginning May 4. Now it says the week of May 11 looks like a better bet. Even then, there will be a few days of worker training before production resumes.

VW also intended to crank up its factory in Chattanooga, Tenn., next week. Earlier today it got cold feet, saying it isn’t sure when it will reopen the plant.

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Both companies say they are prepared to deploy the necessary health and safety measures to keep their returning employees safe. So what’s the holdup?

Two Caveats

Toyota and VW point to two important issues.

Each company says its supply base isn’t fully ready to resume operations. And both want a clearer sense of whether the
COVID-19 outbreak in the U.S. is leveling off or poised for a second surge.

There’s also a question of how quickly the American car market will revive. Dealers have been sitting on inventory for six weeks. They aren’t likely to place big orders for more cars and trucks until they see action in their salesrooms, many of which are still shuttered by state decrees.

Tricky Adversary

Much of the hesitation among carmakers and suppliers can be attributed to persistent uncertainty. After two months of quarantines, shifting medical advice and sharply different attitudes about how to respond, we’re still largely in the dark about the peculiarities of COVID-19.

For many people, an employer’s declaration that it has a handle on workplace safety isn’t necessarily reassuring. The insidious nature of the coronavirus makes some people uneasy no matter what preventative steps are being offered.

It’s also becoming more obvious every day that this particular disaster has created an unusually messy logistical tangle. Just because a company is ready to call back its employees doesn’t mean they can comply, especially those with children whose schools are still locked down.

Bottom Line

There’s no doubt such issues will get sorted out. But it’s plain that it will take some very creative thinking to get us there.

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