Baron Creek

Local Car Manufacturer Shuts Down for 2 Weeks

By:  Baron Creek  •  Economy  •  2 weeks ago  •  14 comments

Local Car Manufacturer Shuts Down for 2 Weeks
Economists warn the virus fallout is only just beginning.

The local factory, which produces 500,000 vehicles each year has announced they are shutting down for 2 weeks. In the grand scheme of things, this would amount to 20,000 vehicles not being produced. Of course, the press release says that all employees will be paid during this period. Sounds good, but...

Not all people working at the plant are "employees" of the company, which is about 8,000. What about those 2,000 others? What about the myriad suppliers located far and wide that number in the 10s of thousands, for this single plant? I will be monitoring that situation, as even in retirement, I am not oblivious to these companies. As for the 2,000 mentioned earlier... a high percentage will need to file for unemployment.

That's where the rubber hits the road, imo. 

The company states the shutdown is to deep clean and protect employees, yada yada. I am sure they and all companies in the industry are aware of the supply chain disruptions that were cascading forward AND the sudden drop in foot traffic at dealers. None of this should be a surprise. The severity and length is is the question. BTW, many suppliers fulfill orders across many of the Assembly plants of all auto companies. Meaning what one does, impacts all. The days of any car company controlling the entire supply chain, such as Ford's River Rouge are long gone. 

So two weeks might not be such a disruption. However, does anyone really expect foot traffic to suddenly revert to norm, covid-19 to be miraculously cured and everthing to return to nomal and be hunky-dory? Industry sales were already slipping prior to Covid-19, so don't bet on it, imo. 

It has become popular to say " 2 weeks ", but will these companies and suppliers continue to be so generous if sales continue to drop?

Let's hope it doesn't come to that.


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Baron Creek
1  author  Baron Creek    2 weeks ago

Here's hoping all of this social distancing is working.

2  Kavika     2 weeks ago

Let's hope that it doesn't come to extended closure of the plants. The economic fallout could be devastating in the long term

Thanks for the link to Ford's River Rouge. Interesting read. 

3  Krishna    2 weeks ago

Trump and his Merrie Band of Thieves  have downplayed the seriousness of the Virus from the beginning:

Kellyanne Conway said it was contained.

Rush Limbaugh said is was just like the common cold, 

Mike Pence said he and Trump still shake hands.

And his "base" was dumb enough to believe them! 

But as politically incorrect as it was, I never believed them.

Transyferous Rex
3.1  Transyferous Rex  replied to  Krishna @3    2 weeks ago

Don't count me in that number Krishna. Although, I'm not sure I qualify as his "base". 

Ironically, I witnessed a doctor downplaying this on a news channel, other than Fox, while the early numbers (which were being displayed during the downplay) clearly indicated this thing was going to be way more impactful than SARS. 

I don't think canceling flights from China was a downplay move. 

Split Personality
3.2  Split Personality  replied to  Krishna @3    2 weeks ago

There's going to be you tube compilations of all of the contradictory things that both POTUS and the Administration

have said at umpteen news releases & pressers where there are lines of "dignitaries" nodding like bobble dolls with whatever

nonsense Trump, Pence and Azar are delivering.

That, plus the Fed lowering the rate on a Sunday sank what little confidence the majority has left in this Administration.


3.3  r.t..b...  replied to  Krishna @3    2 weeks ago
But as politically incorrect as it was, I never believed them.

So contradictory in placing blame on China for not being forthcoming, though they did contact the W.H.O. in an appropriate time frame, while simultaneously downplaying the effects on our shores. And yet, the attacks continue while we scramble to get face masks, for goodness sake, much less have the required testing in place. South Korea and the U.S. had the first incidence of the outbreak on the same day...just look at the comparative response. 

We have seen individual mayors, school districts, state governors, and sports leagues making tough calls way ahead of this administration. In fact, after today's press briefing, there is still little information coming forward other than 'we are days away', 'we'll see what happens', 'we have this under control'...none of which can give our citizenry much comfort nor confidence in the federal response.

Past time to get your shit together, folks...the American people can handle the facts and the consequences, just give it to us straight.

Be safe, all.

Split Personality
3.3.1  Split Personality  replied to  r.t..b... @3.3    2 weeks ago

Our Air Force just airlifted 500,000 WHO virus swab test kits from Italy.

When they arrived in Memphis TN they were distributed to a fleet of waiting FEDEX planes for distribution.

Transyferous Rex
4  Transyferous Rex    2 weeks ago

Baron (I like it BTW), anywhere near the age your avatar looks? If so, you've probably seen something along these lines before. I can say that I have not. I grew up in the oil patch, and there is talk about the 80's, but I was way too young to remember. 

Folks around here have been cinching up the ol' belt for several years now. Most of the guys in the oil patch are used to a roller coaster ride. The ones that aren't are introduced. I'm not sure anyone has ridden with the likes of COVID-19 though. Talking with a friend, and owner, earlier...tough decisions are ahead. This is a fish or cut bait situation. 

Just Jim NC TttH
4.1  Just Jim NC TttH  replied to  Transyferous Rex @4    2 weeks ago

I lived in and started a business in Oklahoma City in 1981 and the oil patch did get hit hard. I had a steel fab shop and it did hit hard. The biggest problem I had was finding welders willing to work for $10 an hour (remember this was the 80's) and all of the guys who lost their livelihood would not work for less than $15. They had been making $25-$30 back then and it was hard for them to imagine living on less. Yes, they made and had a lot of money but most worked 16 hour shifts and barely had time to spend it.

It was quite real. 

Transyferous Rex
4.1.1  Transyferous Rex  replied to  Just Jim NC TttH @4.1    2 weeks ago

There is a trade-off for sure. 

Baron Creek
4.1.2  author  Baron Creek  replied to  Just Jim NC TttH @4.1    2 weeks ago
Baron (I like it BTW), anywhere near the age your avatar looks?

Depends on the day. Some days I feel older and some days quite spry! Getting too spry generally results in those other days. 

As for recessions, it seemed like the late 60s to early 80s were one recession after another, accompanied by bouts of stagflation. The 2008 thing was similar to the great depression and accompanied by deflation. The Federal Reserve and Government were much more responsive in 2008, than in the Depression. It got really bad during the depression before either woke up, imo.

Currently, very large numbers are being bandied about and frankly they do look necessary to prevent a depression style collapse. Unfortunately, they are also Greece-ing the wheels for something else, imo.

Like I say... I hope all of this does work.

Transyferous Rex
4.1.3  Transyferous Rex  replied to  Baron Creek @4.1.2    2 weeks ago
Greece-ing the wheels

Not a huge fan. I'll admit I don't have the answers though. 

Greg Jones
5  Greg Jones    2 weeks ago
Economists warn the virus fallout is only just beginning.

There have been shut downs of two weeks or longer before, mostly caused by union strikers.

One thing I have learned to do is not put much stock in what "economists" say or predict.

They never seem to get a forecast right. The supply chains will remain in place and start supplying again after the temporary shutdown, just like they have always done in the past.

In the meantime, the social distancing should reduce new cases.

Baron Creek
5.1  author  Baron Creek  replied to  Greg Jones @5    2 weeks ago
They never seem to get a forecast right. The supply chains will remain in place and start supplying again after the temporary shutdown, just like they have always done in the past.

That was the issue in 2009, with the auto industry bailout. If GM and Chrysler had been allowed to go under without government intervention, it would have been the final straw for many supplier companies. Not only ones supplying solely to GM and Chrysler, but a significant number that supplied multiple companies. Trying to determine which supplier company was most vulnerable, along with attempting to re-source that product from scratch... without disrupting our company was very stressful. 

This time there are multiple industries that will need bailouts of one form or another, imo.