Automotive suppliers in West Michigan will begin warming up the industry’s supply chain next week.
Gov. Gretchen Whitmer has given the green light to all manufacturing operations in the state after weeks of idling due to the outbreak of COVID-19.
“This is a really important moment and I think it’s critical that we acknowledge manufacturing is an important part of our economy — there’s no question,” Whitmer said at a press conference on May 7.
Overall, manufacturing accounts for about 19 percent of Michigan’s economy. Only about 5 percent of manufacturers in the state remained open throughout the shutdown to provide essential goods and services, according to Whitmer.
Manufacturers will resume non-essential production as early as Monday. In accordance with the new executive order, they will be required to provide working environments with enhanced safety precautions to prevent further spread of the highly contagious coronavirus.
In agreement with the United Auto Workers (UAW), General Motors, Ford Motor Co. and Fiat Chrysler Automobiles are aiming to restart production throughout North America on May 18. The Detroit Three automakers will begin “phasing in work” on that day, starting with 5 percent of their capacities “and going up from there,” Whitmer said.
Most automakers and suppliers have been shuttered since March to protect the factory workers and slow the deadly virus outbreak. The Ann Arbor-based Center for Automotive Research estimated that each week of the shutdown cost $7.3 billion in overall earnings for the industry, siphoned $2 billion from government tax revenue and could lead to an “annual loss” of 94,400 jobs.
More than 530 existing manufacturing and engineering design firms in West Michigan supply the automotive industry, according to estimates from the economic development organization The Right Place Inc. These companies support more than 55,000 jobs in the region.
Late last week, Reuters reported that the Motor and Equipment Manufacturers Association and the Original Equipment Suppliers Association sent a letter to Whitmer explaining that “delays in re-opening facilities would increase liquidity risk for suppliers and jeopardize long-term capital investment and employment for Michigan.” The letter also asked Whitmer to “to provide clear authority for automotive suppliers to restart their operations in Michigan at least five days before OEM production begins.”
Auto parts suppliers and tool and die shops need to get head start on the OEMs in order for the complex supply chain to sync successfully, according to Zac Williams, director of innovative supply management at Western Michigan University.
“The (OEM) plants aren’t going to be able to reopen unless they’ve got parts and the parts don’t just show up without suppliers,” Williams told MiBiz.
After weeks of idled machines and vacant factory floors, weak links throughout the supply chain are likely and will need to be straightened out before production can resume smoothly.
“So much of our industrial assets are designed to run at high capacity. In many cases, they’re just continually running,” Williams said. “They’re not meant to sit idle for long periods of time, so there will be a whole upstart process to crank things back up and wind up that industrial process.”
In addition, manufacturers are required by the state to execute stringent safety measures including pre-work screenings, dedicated entry points, masks or face shields where social distancing is not possible and training for workers on the transmission of COVID-19 and use of personal protective equipment.
“There will be significant changes to the way that we work in an industrial setting which has been in place for hundreds of years,” Williams said.