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The automotive industry is reopening, but challenges lie ahead

As a result of the COVID-19 pandemic, car sales plummeted, automakers shut down plants, and the industry braced for one of their biggest challenges in history.

The automotive industry, which represents the nation’s largest manufacturing sector and employs roughly 1.5 million people in manufacturing, sales, and service, took a major economic hit. In fact, car production in April fell by a staggering 99.7% from April 2019.

But automakers were quick to adapt. They implemented new procedures to keep workers safe and Toyota, Honda, Ford and GM began to reopen in May.

Recently, the New York Times reported sales have rebounded so quickly that automakers are working to ramp up production. While this may give automakers and suppliers reason for optimism, new challenges, including labor shortages and supply chain disruptions, lie ahead.

Despite precautionary measures such as temperature testing, social distancing, and providing PPE including masks and face screens, Toyota has identified at least 40 plant employees who came to work with the virus, according to Reuters. In addition, Ford temporarily shut down two factories because of positive cases just two days after reopening them.

Staff shortages are evident in Ford Motor’s Kentucky truck plant, where about 15% of its employees aren’t showing up for work each day, according to The Wall Street Journal. In this new normal, staffing up and down the supply chain will continue to be problematic as many employees refrain from going to work, and those who do, are required to social distance, wear uncomfortable gear, and take on extra tasks for their absent co-workers.

Supply chain disruptions may present a larger problem. Automakers rely on hundreds of suppliers, many of which are located outside the U.S., for just-in-time delivery. With so many suppliers reducing production and even shutting their doors because of worker shortages, maintaining smooth operations will be nearly impossible for automakers.

Under such stressful conditions, mistakes are inevitable. And discovering them quickly is much more difficult, so many of them are likely to slip through the cracks. Recalls, litigation, and reputational damage will follow. As production ramps up, automakers and manufacturers need to be extra vigilant now more than ever before.

If you haven’t done so already, reevaluate your operational and crisis plans to include the probability of disruptions like the ones we’re now facing. Based on experience, we believe the worst may be yet to come. We hope we’re wrong, but would you want to bet your company against it?

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