Honda Plans to Shut Down North American Plants for Six Days Due to Virus Concerns, Demand Decline -- Update

By Christina Rogers 

Honda Motor Co. said Wednesday it will temporarily close about a dozen factories in the U.S., Canada and Mexico for six days to respond to concerns about the rapidly spreading virus and in anticipation of lower consumer demand.

The Japanese auto maker will suspend production at these plants, which include those that assemble vehicles as well as build engines and transmissions, starting Monday -- a move that will affect 27,600 jobs, the company said.

Honda said all impacted employees will be paid during the downtime, which it anticipates will reduce factory output by about 40,000 vehicles.

The action marks the first time a major auto maker has initiated a region-wide shut down of its factories in North America to mitigate the impact of the outbreak.

In Europe, most global car companies have temporarily suspended work at their plants, and on Tuesday, Ford Motor Co. said it will have to close its Chicago plant for a short period of time due to a parts shortage.

Car dealers tend to carry a few months of stock, so a temporary shutdown isn't expected to have an immediate impact on consumer choices. But over time, it could lead to shortages of certain models and replacement parts for fixing vehicles.

At the end of February, Honda lots were well stocked with vehicles, carrying a nearly three months' supply, according to Wards Intelligence.

The Detroit car companies have also been under pressure to suspend work at U.S. plants.

Earlier this week, leaders at the United Auto Workers union asked Ford, General Motors Co. and Fiat Chrysler Automobiles NV for a two-week shutdown of U.S. manufacturing facilities to prevent the spread of the virus among workers.

Late Tuesday, union leaders and company executives struck a deal to keep the plants open by taking other preventative steps, including partial shutdowns of the assembly lines to allow for deep cleaning.

In recent days, analysts have sharply cut their sales forecasts for the U.S. auto industry, anticipating consumer demand will drop as large parts of society shut down and the pandemic continues to dent economic activity, potentially pushing the U.S. into a recession.

José Muñoz, chief executive of Hyundai Motor Co.'s North American division, said in an interview Tuesday that he expected companies to cut production accordingly.

"You don't want to produce cars you can't sell," Mr. Muñoz said.

Write to Christina Rogers at [e-mail]

(END) Dow Jones Newswires

March 18, 2020 10:56 ET (14:56 GMT)

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