Fiat Chrysler is temporarily closing four plants in Italy as the new coronavirus affects the eighth largest economy in the world.
The move follows a decision by the Italian government to impose radical restrictions on travel and public gatherings while trying to contain the worst outbreak of the coronavirus, or Covid-19, outside of China.
The Italian-American automaker said in a statement on Wednesday that the plants will be closed and production rates will be cut “to support the national campaign that addresses the Covid-19 crisis.”
The closure of plants in Europe illustrates how the impact on the auto industry of coronavirus is globalizing. The pandemic has already caused prolonged factory closures and a sharp drop in vehicle sales in China.
A Fiat Chrysler spokesperson said the affected plants in Italy will remain closed for the rest of the week to “minimize the risk” of contagion among employees. They are expected to reopen on March 16.
To limit contact between workers, the company said it will increase the space between employees at its workstations. This will require a change in manufacturing processes and will lead to lower daily production rates.
Other measures to stem the spread of the virus include allowing some employees to work from home and checking the numbers in the company’s coffee shops.
Italy imposed widespread restrictions on travel and public life across the country on Monday, including the closing of schools, cinemas, museums and gyms, and the limitation of opening hours for bars, restaurants and shops.
Economists say the measures are likely to push the country’s already fragile economy into a sharp recession that will put Italian hotels, travel companies and restaurants under intense pressure.
Another threat to automakers.
Global automakers have been struggling with supply chain disruptions after a coronavirus blockade in China inactivated parts suppliers and forced some automakers to temporarily halt production in the country.
Volkswagen, the world’s largest automaker, said on Wednesday that nearly all of its locations in China are producing again. Nissan was able to restart three of its plants in China last month. But only two others, one located near the virus zero zone in Hubei province and the other in neighboring Henan, are expected to reopen later this week.
A sharp drop in demand in China has threatened to push the industry into a deeper recession. Sales of passenger vehicles in China, the world’s largest car market, fell 92% in the first half of February.
The emergence of a large number of coronavirus cases in Europe threatens another key sales and production center for global automakers.
Europe’s auto industry is highly integrated, with supply chains crossing multiple countries. Germany is the home of Volkswagen, as well as BMW and Daimler. Renault and Peugeot, which is merging with Fiat Chrysler, are based in France.
If France and Germany are forced to follow Italy in implementing radical restrictions to stem the spread of the coronavirus, automakers will be in even more pain.
A Volkswagen spokesman said its factories outside of China are working “without significant restrictions.” But the company, which owns Lamborghini, said it is watching the situation in Italy “very closely.”
Source: This article was originally published in “news-daily.com“