COVID-19 roundup: Paccar shutting down production, Ford extends shutdowns, GM maxes out its credit cards
Kenworth T680
Paccar Inc.

COVID-19 roundup: Paccar shutting down production, Ford extends shutdowns, GM maxes out its credit cards

Automakers, commercial truck companies take steps to protect workers, shore up financial health as the global economy hits pause as novel coronavirus spreads.

Subscribe

Cleveland, Ohio – Hopes of short plant shutdowns to fight the spread of COVID-19 appear to be fading as commercial truck companies and automakers prepare for longer closures. The latest coronavirus news includes:

Ford extending plant shutdowns

When Ford announced plans to shutter all North American plants last week, the goal was a March 30 restart. Since then, however, the governors of Michigan, Ohio, and other manufacturing states have extended shelter-in-place orders as the number of infected rises and fatalities climb.

Kumar Galhotra, Ford’s president of North America, said, “Ford’s top priority is the health and safety of our employees, dealers, customers, suppliers and other stakeholders. In light of various governments’ orders to stay and work from home, Ford is not planning to restart our plants in the U.S., Canada and Mexico on Monday, March 30 as originally hoped.”

Company officials said they’re working with union representatives to establish new re-open times, but no dates have yet been set. Ford’s action follows Toyota’s announcement from Monday that it would extend its North American shutdowns through early April.

General Motors (GM) draws down credit lines

GM plans to draw down approximately $16 billion from its revolving credit facilities, effectively maxing out its credit cards to have cash on hand as the economy slows. Taking out the equivalent of consumer cash advances will give GM about $32 billion in cash by the end of the month to weather the COVID-19 crisis.

“We are aggressively pursuing austerity measures to preserve cash and are taking necessary steps in this changing and uncertain environment to manage our liquidity, ensure the ongoing viability of our operations, and protect our customers and stakeholders,” said Mary Barra, GM chairman and CEO. “Over the past several years, we have made necessary, strategic decisions and structural changes that have transformed the company and strengthened the business, better positioning us for downturns.”

As several other companies have done, GM is also suspending its financial guidance to investors for the rest of the year, saying the chaotic financial conditions spawned by the coronavirus makes the market too uncertain to predict.

Paccar shutting down North American production, says it is strong enough to weather COVID-19

Paccar will suspend commercial truck and engine production at its factories worldwide from March 24 until April 6, 2020. In April, the company will review future production plans. The Class 8 truck market was struggling before the virus slowed trade as it dealt with the bust side of the cyclical boom-bust truck market.

While plants are closed, truck company officials said they’d continue shipping aftermarket parts to keep trucks, ambulances, and other critical vehicles in service.

The truck company expects lower sales and earnings in the short term and will update investors on the state of the industry on April 21, 2020, when it reports Q1 earnings. Like GM shoring up its cash position, Paccar executives say they have the financial resources to handle slowdowns. The company has an excellent credit rating and has $4.3 billion in cash and $3 billion in available credit.

“PACCAR’s excellent balance sheet, experienced leadership team, and outstanding employees will contribute to the company successfully managing through this difficult period,” said CEO Preston Feight.

About the author: Robert Schoenberger is the editor of Today's Motor Vehicles and Today's eMobility and a contributor to Today's Medical Developments and Aerospace Manufacturing and Design. He has written about the automotive industry for more than 20 years at The Plain Dealer in Cleveland, Ohio; The Courier-Journal in Louisville, Kentucky; and The Clarion-Ledger in Jackson, Mississippi.

rschoenberger@gie.net