The European Automobile Manufacturers’ Association said that factory closures have so far affected roughly 40% of workers directly employed in vehicle manufacturing in Europe. The work stoppage has already reduced regional production by 1.2 million units, it added.
“Right now, the primary concern … is to manage the immediate crisis facing the auto industry, which has essentially come to an abrupt halt — something the sector has never experienced before,” said Eric-Mark Huitema, director general of the association.
“Supply chains are affected and workforces are affected. It is challenging to manufacture vehicles and components without endangering a workforce,” said Calum MacRae, an analyst at GlobalData.
The European industry association said that nearly 14 million jobs in Europe depend on automaking. And 83% of European automotive suppliers are concerned about supply chain disruption because of the pandemic, according to research firm IHS Markit.
“In periods of crisis, financial liquidity is of top priority,” CEO Elmar Degenhart said in a statement. “To this end, we are cutting our costs, optimizing our working capital and postponing projects and investments that are not urgently required until further notice.”
Companies take action
Volkswagen, the world’s largest car manufacturer, has shuttered factories in Europe including its plant in Wolfsburg, Germany, one of the biggest manufacturing sites in the world. Fiat Chrysler has also shut down its factories across Europe, but there have been no permanent layoffs made by the group yet, according to a spokesperson.
“As the pandemic has spread, we have prioritized creating a safe and healthy workplace but also worked to safeguard the jobs of permanent FCA employees,” CEO Mike Manley wrote in a letter to employees on March 30. FCA employees in Italy are taking temporary leave, with their pay subsidized by the government.
Honda employs 3,000 people at its factory in Swindon, in the United Kingdom, where production has been suspended until April 14 in accordance with government guidance. Workers who are not required to attend work will continue to receive pay.
Other carmakers have taken similar steps in Europe.