- American Honda Motor Co. had to send white-collar workers in July and August to its Marysville, Ohio plant due to labor shortages from the ongoing pandemic.
- The move introduced a slew of concerns for customers, particularly around product quality.
- While substituting automotive assembly lines with untrained department staff may have consequences for customers long term, experts said it may be a risk the industry needs to take to protect short-term sales.
- The industry also had to delay several launches of new models, as supply-chain concerns and understaffed production lines persisted for six months.
- Though stacking up production lines with staff could improve the industry's current state, the resulting losses might lead to significant consolidation and cost-cutting measures in recovery.
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It would seem like a nightmare situation for any highly-specialized industry: the need to tag in white-collar workers to take over product assembly lines due to an unprecedented string of absences among employees. It's the kind of emergency measure one expects to hear about during wartime or a natural disaster.
Welcome to the COVID-19 reality faced by American Honda Motor Co., which in the months of July and August was forced to do all of the above at its Marysville, Ohio assembly plant. The facility is a key component of Honda's US operations, as it's responsible for building not just the Honda CR-V compact SUV and the Honda Accord sedan, but also the brand's Acura NSX hybrid halo car.
The situation required accounting, research and development, and other internal departments to send workers down to the factory floor, with some of these employees having been called in from home, where they'd been working remotely. No training was provided to any of the temporary line replacements about the tasks they were charged with until they arrived at the 4-million square-foot plant.
It was a highly unusual situation in an industry where most temporary workers, such as those hired by Ford in advance of potential COVID-19 absences, are pulled from an existing pool of skilled labor.
When untrained hands are working on some of the most important vehicles in an automaker's line-up, it immediately poses concerns for new car buyers:
- Are the vehicles that were assembled during the past two months at Honda's Ohio plant built to the same quality standards as other Hondas?
- Would it be wise to avoid plunking down a deposit on an Acura or Honda model that may have been put together at Marysville during the period in which clerks, accountants, and administrative personnel were substituted in for long-time assembly experts?
- And finally, is this merely one symptom of how COVID-19 has disrupted automotive production and sales for many different automakers across the entire country?
Experts say Honda's decision was a risk worth taking
Reaching out to a number of automotive industry experts revealed a broad range of opinions about what Honda's COVID-19 assembly line substitutions could mean for customers down the road.
"Vehicle production is an extremely complicated process, and snags at any part of the supply chain, including final assembly, can wreak havoc on the delicate balance required to turn a profit on the multibillion-dollar investments required to develop and produce new vehicles," said Eric Lyman, senior vice president at ALG, a leader in automotive analytics.
Lyman said he feels that Honda's decision in Ohio could have consequences for customers down the road, but concedes that it's one the automaker may have been forced into by the uncertainty surrounding the current pandemic.
"Replacing absentee assembly line workers with untrained staff from other departments is a move that puts long-term quality/durability at risk to protect sales in the short term, but it may be a risk worth taking if suspending production leads to significant reductions in revenue or precious market share that can be costly to win back over the long run," he said.
It's important to understand, however, that automotive quality assurance doesn't begin and end with assembly workers. Each major factory has its own quality department that performs extensive checks on vehicles as they come off of the line, and in some cases even perform spot inspections in the midst of the production process. Cars, trucks, and SUVs then have any individual issues corrected prior to being allocated to dealers, well before they reach a new owner's driveway.
"Honda's internal processes for checking quality throughout the assembly process is extremely robust, among the most robust in the industry," said Ed Kim, vice president of industry analysis at automotive marketing research and consulting firm AutoPacific. "It is possible that vehicles assembled during this time may need more adjustments before they are deemed fit to be shipped, which may ultimately affect overall plant productivity."
Kim said he's also less concerned with the lack of prior training being given to workers tapped for the shift from a white-collar to a blue-collar role, explaining that modern autoplant assembly processes are automated to the degree where any specialized knowledge would be quick and easy to impart on a newcomer.
Honda, along with several other brands, closed factories completely in the United States earlier this year as a result of the pandemic, while Fiat Chrysler Automobiles was forced to deal with line shutdowns resulting from friction between employees and management over how worker protections against the virus were being handled. When asked for comment, Honda representative Chris Abbruzzese reiterated that quarantining a portion of its factory workforce this summer was part of a comprehensive contact-tracing program intended to protect the health of its staff.
Abbruzzese pointed to recent improvements to onsite testing that have reduced the impact of COVID-19 on Honda's worker availability, and explained that office staff had been returned to their original roles at the Marysville plant. "These were temporary measures we used successfully on previous occasions to meet our customer needs," he said. "However, we are no longer utilizing this practice in Ohio."
Big ripples in future product plans as companies delay new vehicle launches
Production quality and staffing aren't the only challenges facing the automotive industry as a result of COVID-19. The economic downturn of the past six months, combined with rising unemployment, have led automakers to introduce new models later in the year than they would normally. Auto sales are expected to plunge as much as 22% compared to 2019, according to a new report from Freedonia Focus Reports, and the uncertainty over when the public would be willing to buy again dovetailed with production concerns and logistics issues with suppliers to cause a pushback in important vehicle launches.
Ford has born the brunt of the pandemic problem with two of its highly anticipated trucks. The Ford Bronco, a retro-inspired SUV that was the focus of huge promotional efforts by the company, had its showroom appearance delayed until 2021, even after a major summer launch event. More importantly, the next-generation Ford F-150 full-size truck, which is the bestselling vehicle in the country, saw a delay of over two months before dealers could accept orders for the new pickup.
Each of these holdups was directly tied to production concerns on the part of the Dearborn, Michigan-based company, according to Michael Levine, production communications manager for Ford's truck programs. "The launches of F-150 and Bronco have been retimed to match how long our factories were shut down for COVID-19," he told Business Insider.
Changing course mid-stream, as Ford and several other automakers have been forced to do, is not an easy process due to the extremely complex web of manufacturing realities, supplier schedules, and market timing that dictate when new vehicles go one sale.
"It's detrimental to the program to delay the launch of a vehicle," Kim said. "Certainly, there have been COVID-related launch delays, but those have generally been due largely to supply chain issues rather than a desire to wait to launch the vehicle in a more favorable economic climate."
Lyman added that sales recovery could be coming much quicker than predicted, and that automakers are fortunate that consumer interest in new cars and trucks did not completely collapse over the summer.
"Vehicle demand in the post-COVID environment has largely outpaced expectations." he said. "Decisions made in Q2 to pull back on vehicle production or the launch of new products seemed logical at the time, but have proven to be the wrong course of action."
A reckoning on the horizon
The prospects for those buying cars and crossovers assembled by Honda's Ohio plant pinch hitters are less grim than it would initially seem. Most experts consulted agreed that while there was a risk for quality issues to develop with the vehicles built during this small summer window, Honda's internal controls would do a strong job of picking up the slack and filtering out almost all problems prior to them going on sale.
As for vehicle availability and launch dates, the situation remains necessarily fluid. The course of the COVID-19 pandemic is unpredictable, and staffing issues at plants located around the world — combined with the interwoven network of suppliers feeding vehicle parts and systems to those plants, and the transportation hubs required to distribute them to customers — reveal just how vulnerable the industry is to this type of disruption.
The resulting massively reduced profits and predicted losses for 2020 will no doubt shake up the status quo at every major car company, which could in turn lead to a flurry of consolidation and cost-cutting measures in the ensuing recovery phase.
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