Ford is not considering restarting production of automobiles anytime before May and even then the timeline is murky, CEO Jim Hackett acknowledged Tuesday.
“My gut tells me we’re into May now, but we’re not projecting a date until the president actually comes through with, ‘I want to turn the economy on by x date.’ That’s really the healthiest thing, is for all of us to be coordinated together,” Hackett told WWJ Radio.
He said he wanted to publicly explain the reasons for delaying the restart of auto plants in North America indefinitely. In addition, he talked about the strategy of when to cut pay and perceived risk in the workplace.
“We think about the employees first and their health.The hard thing is, if you’re off and on in parallel — in other words, there’s a bunch of challenges to businesses today, that some states up until the last five days were still open for business while others were closed,” he said. “And I’ve talked to the people in the government about this. The duality of that is really hard, it’s very costly and may not be safe, actually.”
Hackett explained that the sheer logistics of factory operations may be more complicated than people realize.
“So as we approach the question of turning on factories, first of all, you have to do them in a stepped way. You can’t just go in and say, ‘Hey everybody, report on Monday.’ Because all the different subsystems in the factory have to be tuned and ready to go — paint, and welding, and all the kind of technology that actually does come on. You have to then get the build of the vehicle to happen in sequence,” he said.
“When you go into an auto factory, it looks so choreographed, but actually there’s an end of the line, so to speak. So the day you start production, there’s no product for the end of the line. It hasn’t been coming through the front of the line. So you have to sequence to get all that rolling,” Hackett said.
When asked about UAW concerns over worker safety, Hackett said the mix of economic uncertainty and safety issues creates unique challenges.
“We talk about, what do we do to protect our employees,” Hackett said, “and how do we protect them financially through this?”
He explained, “The last thing you want to do is be firing a lot of employees. So we’ve been communicating to the employees, ‘Look, hang in there, we want you to be here at Ford. We want you to be here when the spaces are safe enough to have you.’ And this is a new message, ‘You will be coming back when you still have, you know, concerns, and we’re going to do things to alleviate that. We’re going to go beyond what a normal space will feel like so that you come in with these kinds of controls already … to give you confidence we have control of the virus.’ ”
Taking temps
The mystery and uncertainty around the novel coronavirus make timelines uncertain, he explained.
“So we originally thought April 14 was the time we’d start the earliest parts of that process but we just don’t feel comfortable yet that the curve is bent far enough down,” Hackett said.
“We think that, as we get through the curve flattening, there will still be, because we’ve witnessed this in China, an awareness that people will be walking out in an environment where the virus is still in place, but the herd immunities made it less virulent and we’ve been able to build systems to help protect people.”
As an example, he said Ford “can have cameras that show temperatures,” he said.
“This is de rigueur in China. You don’t walk into a building without them seeing what your temp is,” Hackett said. “And then the social distancing, and the way we build the cars, will be re-conceived, so that we think about people’s safety relative to each other. All that comes together orchestrated in a way that my gut tells me we’re into May now.”
Salary cut v. furlough
Ford is not considering pay cuts for employees at this time.
“We’re doing everything in the earliest steps to not have to touch their pay … I’ve said to our team that, ‘I’m telling you exactly how I’m thinking about this, I’m trying to keep everything status quo, but as time goes on, I’ll have to make more changes,’ ” Hackett said.
“And this furlough idea is probably the best one,” he said. “There was a piece in Fortune magazine by the guy who ran Honeywell where he says he wished in ‘06 and ‘08 he didn’t fire as many employees, lay them off, so to speak. Using furloughs is a smart way, where you can dial down some of the compensation. It’s painful but the jobs aren’t in question.”
The idea, he said, is to work three weeks and take a week unpaid.
“And then, as we get through it, you’d dial back up the pay,” Hackett said. “That would be the next thing we would do. We would push ‘go’ on that when we felt like the rapid return to work had been jeopardized.”
The issue, really, he said, is whether state and federal officials determine a safe return to work. The key is getting started, he said, by “early May.”
More: Ford restart postponed indefinitely; GM says situation ‘fluid’ as COVID-19 stalls industry
Contact Phoebe Wall Howard at 313-222-6512or phoward@freepress.com. Follow her on Twitter @phoebesaid. Read more on Ford and sign up for our autos newsletter.
Read or Share this story: https://www.freep.com/story/money/cars/ford/2020/03/31/ford-jim-hackett-coronavirus-furloughs/5096816002/