The days of American automakers are not easy.
Editor’s note: This article is from WeChat public account “NBD car” (ID: NBD-AUTO) author: Zhangbei.
As the number of deaths in New York, Michigan and other regions soars, the United States will enter the most critical week of the new coronary pneumonia epidemic crisis to date. According to real-time statistics from Johns Hopkins University, as of 19:00, April 7, Beijing time, there have been more than 360,000 confirmed cases of new coronary pneumonia in the United States and more than 10,000 deaths.
In this context, American automakers are not having a good time. On April 7 local time, according to foreign media Electrek, Tesla announced a global salary reduction plan to employees that day, saying that this move will continue until the end of the second quarter of this year. Prior to this, the executives of automobile companies such as Ford, General Motors, Fiat Chrysler (FCA) and others all took the lead in implementing the salary reduction plan.
At present, most of the above-mentioned car companies in the United States are in a state of suspension of production, and there is no clear date for resumption of work. In addition, due to the significant decline in the demand for American autos due to the epidemic, car companies such as Ford and General Motors are facing cash flow pressure, and their credit ratings have been successively lowered.
01
US car companies successively push down salary reduction plans
On April 7, an internal letter from Tesla to employees showed that from April 13 on, Tesla will take measures to reduce expenses, and all employees whose online office and job level are more critical will be paid according to salary. Different levels of salary reduction. Among them, in the United States, the salary of the vice president and above is reduced by 30%, the salary of the director and above is reduced by 20%, and the salary of all other employees is reduced by 10%. Employees who cannot work online or are not regarded as “necessary” will be arranged for vacations. There will be no salary during the vacation, but the medical insurance benefits provided by the company will not be affected.
Tesla said that in the next few days, employees will be sent vacation notices by email and will provide instructions for applying for unemployment benefits. During vacations, unemployment benefits will be the employees’ actual wages. At the same time, employees in other parts of Tesla’s world will also reduce wages to a certain degree. The specific details will be formulated by the local leadership team in accordance with local laws and work committee requirements.
It is understood that Tesla’s super factory in Shanghai, China has resumed production and production. The relevant person in charge of Tesla’s Shanghai factory said in an interview with the media that the Shanghai factory’s resumption rate has exceeded 91% since March 6, and the production capacity has exceeded the level before the epidemic. Regarding the salary adjustment plan in China, Tesla said in an interview with the media: “The measures in China will be different, and a formal reply will be announced later.”
As of the close of April 7, EST, Tesla (TSLA) shares rose 5.66% to close at 545.45 USD / share, with a market value of 100.206 billion USD.
In fact, Tesla’s salary cuts are not alone. Earlier, Ford, General Motors, and FCA all announced salary reduction plans.
On March 26, Ford Motor announced that from May 1, 20% to 50% of Ford ’s 300 executives ’salaries will be delayed for at least 5 months. Among them, Ford’s executive chairman Bill Ford’s salary will be postponed, Ford CEO Han Kaite, COO Jim Farley, CFO Tim Stone will delay the payment of 50% of the salary.
On March 27, General Motors also announced a decision to reduce pay. General Motors said it will suspend production activities at its North American plant indefinitely, and decided to take measures to delay the payment of wages to its nearly 69,000 paid employees, and will temporarily reduce employees’ wages by 20%. The cut wages and interest will be in One-time return before March 15, 2021. In addition, GM’s board of directors will reduce the total compensation by 20%, and office employees will also temporarily reduce their salaries by 20%. GM will provide them with cash compensation in the range of 5% to 10%, excluding bonuses and stock options Or other incentives.
Subsequently, FCA also decided to reduce the salary of its employees by 20% from the second quarter of this year. The company ’s CEO Mike Manley will temporarily reduce the salary by 50%, the executive board members will reduce the salary by 30%, and the chairman John Elkann (John Elkann) and board members will give up the remaining salary in 2020. Mai Mingkai said that 20% of the salaries of salaried employees in the world that are not affected by the North American shutdown plan will also be temporarily delayed. The specific salary reduction process in different countries may be different. The company will be on March 15, 2021. Repay that part of the salary before.
02
There is no clear time to resume work at the US automobile factory
As one of the global automobile industry centers, Washington, New York, New Jersey and other places are currently in the critical stage of epidemic prevention and control. Affected by this, local automakers are facing difficulties in production and sales.
According to foreign media reports, a few days ago, Ford said it would postpone the plan to restart production in North America. It is understood that Ford originally planned to resume production at several major factories in the United States on April 14. Ford said, “We will continue to assess public health, government guidelines, and supplier readiness to determine when production will resume at our North American facility.”
Photo source: Photographed by reporter Sun Tongtong
Honda, Toyota and other Japanese automakers are also affected. Among them, Honda’s plants in Alabama, Indiana and Ohio have been closed on March 26, and the shutdown will last until May 1. Nissan will extend the shutdown of the US plant to late April; Toyota will stop production in the United States and Canada by April 17.
In addition, GM closed the plant indefinitely, and did not provide a specific date for production restart.
The stagnation of production has put many car companies under great pressure. Ford expects that US car sales may decrease by 600,000 in March.
It is precisely because of this that resumption of work has become a common desire of car companies. Both Honda Motors and FCA have indicated that they hope to restart car production in the United States and Canada in early May. However, some analysts believe that it will take time for auto suppliers to resume production. As far as the current situation is concerned, it is unlikely that American auto companies will resume production before the end of April.
03
The pressure on cash flow increases sharply
Under the epidemic, factors such as declining automobile consumption demand and production pressing of the “pause button” have also put pressure on cash flow in American car companies.
According to American Auto News, GM is planning to reduce the US $ 16 billion credit line while refinancing debt of a similar size. The company is facing longer than expected factory closure time and loss of revenue. Last Tuesday, GM had issued a notice to the lender, saying that almost all of it would be borrowed into existing credit arrangements. In addition, at the time of the decision to reduce the credit line, GM is in the process of refinancing discussions on the $ 16.5 billion debt led by the financial services agency JPMorgan Chase.
Or affected by the above news, Moody ’s Investor Services (hereinafter referred to as Moody ’s) downgraded GM ’s bank credit rating and unsecured debt rating to low. Moody’s said in a report, “The epidemic has caused severe disruption in automobile demand, coupled with the possibility of a subsequent economic recession, which will cause considerable pressure on GM’s cash flow and credit indicators.”
Ford Motor Co., Ltd. has also adopted similar measures to alleviate financial pressure. The company announced that it will use two credit lines totaling $ 15.4 billion to ensure its cash flow is stable. According to a statement issued by Ford Motor Co. on March 19, these payments will be used to offset the losses caused by the factory’s shutdown due to the epidemic.
Recently, investment companies such as Moody ’s, S & P Global and Fitch have downgraded Ford ’s credit rating. Moody’s said, “The severe impact of the epidemic, coupled with Ford’s already weak operating performance and years of restructuring, led to the loss of cash flow.”
According to foreign media reports, automobile manufacturers such as General Motors, Volkswagen and Toyota have sent a letter to the United States Congress recently, hoping that Congress will establish relevantAid facilities to provide loan guarantees to large and medium-sized manufacturers and small businesses facing loss of income. The above-mentioned auto companies predict that in March this year, the U.S. auto retail sales may drop by 40% compared with the same period in 2019.