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Carmakers put brakes on European production as coronavirus hits

By Giulio Piovaccari
The logo of Fiat carmaker is pictured at a dealership in Orvault near Nantes

By Giulio Piovaccari

MILAN (Reuters) - Carmakers including Fiat Chrysler, Peugeot and Volkswagen cut production at European plants on Monday as they grappled with the coronavirus crisis and diving demand.

Worker representatives in Italy, France, Belgium, Spain and Germany have demanded stricter controls on hygiene, disinfection and isolation for employees working heel-to-heel on Europe's production lines.

Audi, Volkswagen's premium unit, said it was struggling to keep production running at its plant in Brussels because some workers had downed tools over concerns they were exposing themselves to the virus.

The topic of how to protect employees was now the subject of discussions between management and unions, the carmaker said.

Fiat Chrysler Automobiles (FCA) is halting production for two weeks at most of its European plants to help protect staff and adjust to a slump in demand, the Italian-American carmaker said.

Italy has been the European country worst hit by the crisis and the first to enforce a nationwide lockdown, which has now been replicated by Spain and to a lesser extent France as the COVID-19 virus sweeps through the continent.

French carmaker PSA, which owns the Peugeot, Opel and Vauxhall brands, also said it was closing its European factories until March 27. Renault said it would suspend industrial activities in France, closing 12 sites and sending home 18,000 employees until further notice.

"The continuity of production activities at the group's plants in other European countries depends on the situation in each country," Renault said.


'VERY BAD' MARCH

The coronavirus crisis has hit the European automotive industry at a time when it is already struggling with weak global demand and tough new pollution regulations.

With non-essential services closed in several countries, including car dealers, and many people staying at home, analysts are forecasting a heavy fall in March car sales and a 4% drop globally this year.

Marco Opipari, an analyst at Fidentiis, said a few weeks of closures were not a big problem in a European auto industry struggling with over-capacity, and that lost production could be recovered later on.

"The real problem is on the demand side. People are not buying cars now, and sales volumes are expected to be very bad in March, with a real impact on automakers' earnings," he said.


FORD AND VOLKSWAGEN

Ford said it was closing its plant in Valencia, Spain, for the rest of this week following a flurry of infections, and would reassess after talks with trade unions.

"We have had three positive cases of COVID-19 on the Valencia site in a 24-hour period, two of which involved more isolated workers who did not enter the assembly operations," a spokeswoman said on Monday.

Employees who had close contact with the affected workers are now in self-isolation.

Last week, some Spanish plants of the Renault-Nissan alliance and Volkswagen's Spanish division Seat announced temporary stoppages that could last for days or weeks.

On Monday, Volkswagen said it had shut down production at its Martorell and Navarra factories in Spain.

It has also reduced its daily output at its Autoeuropa car assembly plant near Lisbon by 16% because of a shortage of workers after Portugal ordered all schools closed.

Volkswagen may have to close its SUV production line at its plant in Wolfsburg, Germany due to a lack of parts reaching the factory, a person familiar with the matter said.

The company said on Sunday it was preparing to suspend operations at its plant in Bratislava after Slovakia declared a state of emergency.

Unions at the Czech car factories of VW's Skoda Auto and Hyundai Motor Co have meanwhile called for a 14-day quarantine for employees, which would halt production for that period, news agency CTK reported on Monday.

Italy is still allowing manufactures to operate during the national lockdown, provided they comply with strict safety measures. However, a growing number of companies are opting to suspend production.

Last week, Ferrari said it was closing its two plants until March 27, while premium brakes maker Brembo said it would temporarily close its four plants this week.



(Reporting by Valentina Za in Italy, Joern Poltz in Munich and Jan Schwartz in Hamburg; Writing by Edward Taylor; Editing by Mark Potter, Jan Harvey and Pravin Char)