Europe's biggest manufacturers including Volkswagen AG, Airbus SE and Daimler AG are idling plants as the rapidly spreading coronavirus inflicts increasingly greater economic pain across the region.
VW, the world's largest automaker, joined rivals and suppliers on Tuesday in suspending output across its European factories as an industrial halt not seen in decades gained momentum. Airbus, the biggest plane maker, will shutter production at sites in France and Spain for four days to clean floor stations and separate workers, while Daimler is halting most of its output in Europe for at least two weeks.
"The corona pandemic presents us with unknown operational and financial challenges," VW chief executive officer Herbert Diess said in an annual earnings webcast. He said 2020 will be "very difficult," and there are concerns about the sustained financial impact of the health crisis.
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VW's shutdown will last about two weeks in Germany, where it operates the industry's biggest plant at its Wolfsburg base. Sites in Italy that build Lamborghini sports cars and Ducati motorcycles, along with Seat economy models in Spain and VW-branded SUVs in Portugal will be idled by week's end. The car maker, Europe's largest industrial company, employs about 475,000 people in the region.
The decision by VW demonstrates the staggering effects the outbreak is having globally, only a few weeks after being mostly confined to China and neighboring countries in Asia. With Europe now the epicenter, and the virus spreading in the U.S., restrictions and self-quarantine have made it hard for manufacturers to keep factories open and move parts around. Meanwhile, demand has slowed to a trickle in both the automotive industry and from airlines that feed the global duopoly of Airbus and Chicago-based Boeing Co.
Like Boeing in the U.S., Airbus is speaking with governments in Europe about aid to the aviation industry. Its move on Tuesday to close plants temporarily followed a further tightening of containment measures by France to limit the movement of people outside their homes.
Airbus is based in Toulouse, France, where it employs about 26,000, churning out wide-body aircraft and the A320neo family of single-aisle aircrafts. Bloomberg News reported earlier this month on a risk of Airbus cutting its annual target for jet deliveries as virus-shocked customers sought to delay handovers.
Car makers from PSA Group and Fiat Chrysler Automobiles NV to Renault SA are also suspending production as they contend with similar challenges. Truck maker Volvo Group said it had shuttered plants in France and Belgium, and expects its Gothenburg, Sweden factory to close on Monday. Nissan is stopping output Tuesday at its giant Sunderland plant in the U.K.
Ford Motor Co. is halting production starting Thursday for a "number of weeks" at its main manufacturing sites in Cologne and Saarlouis in Germany and Craiova in Romania, according to a statement. An assembly plant in Valencia, Spain was shuttered Monday after three workers were confirmed to have the virus.
"Component supplies to Ford manufacturing sites in Europe have been increasingly interrupted, while sales of vehicles across the industry have declined with dealerships required to temporarily close their sales operations in some countries," the company said.
Fiat Chrysler said Monday it will suspend output in most of Europe while PSA Group, the maker of Peugeot, Citroen, Vauxhall and Opel, is closing all European production sites this week, as the French government closes non-essential shops including car dealerships.
The PSA moves affect plants in France, Spain, Germany, the U.K., Poland, Portugal and Slovakia. Rival Renault also shuttered French plants until further notice, a move it said would affect a dozen sites and 18,000 workers.
Among suppliers, Magna International Inc. is shutting down its car assembly plant in southern Austria, where 6,000 workers make Mercedes-Benz, BMW and Jaguar Land Rover vehicles, for two weeks because it can't get needed parts. Tire-maker Michelin idled nearly all factories in Spain, France and Italy, a move that will affect 21 sites and about 20,000 workers.
VW said it's unclear how severely or for how long it will be affected.
"It is almost impossible to make a reliable forecast," chief financial officer Frank Witter said. "We are making full use of all measures in task force mode to support our employees and their families and to stabilize our business."
Business on 03/18/2020