Ford pushes for factory restart by April 14th

Ford has announced it is considering reopening five of its North American assembly plants in April. The On The Move panel breaks down the decision and what it could mean for the automaker.

Video Transcript

ADAM SHAPIRO: Something else we're watching right now is the news this morning that Ford, Ford is actually planning to restart production at some of its plants in North America as early as April 6. They also would extend that on April 14. And what they're talking about is opening their Dearborn truck plant, their Kentucky truck plant, the Kansas City assembly plant's transit line, and an Ohio assembly plant, again, on April 14. They say they will take additional safety measures to protect returning employees. The UAW says it is reviewing this, quote, "with great concern and caution."

Brian Cheung, let me ask you. We heard from the Federal Reserve chairman talking about getting Americans back to work. But what we keep hearing is not until after the health crisis has passed. Has Ford jumped the shark here? Are they going too fast?

BRIAN CHEUNG: Well, you wonder to what extent the April deadline is pegged to what President Trump was saying earlier this week, which that he hopes to get the economy up by Easter, which by many measures, all economists and health experts would say is kind of very optimistic. So the question here is going to be, how long will this be sustained?

So as we know with a lot of these capital intensive projects from automakers-- the same applies to oil companies, for example, in Texas and Oklahoma, where we've seen oil prices crunch-- the question is, how long can you hold these plants off? The longer you do, the more you're bleeding money, where that ends up providing pressure on being able to find financing in the debt markets, for example.

By numbers, though, the auto industry is huge. We know this from 2008. The recent counts that we have from the three major US automakers-- that's Ford, GM, Fiat Chrysler-- that totals about 150,000 union workers that are currently sidelined because of the stoppages related to COVID-19. That is a huge amount of data.

Even when we recall in November of last year, in October, in November last year when there was that GM strike, that had a material impact on data that we saw for the October jobs report. So just one company alone is already impactful. Imagine all three of the major US auto manufacturers facing this hit.

So the question is going to be, how long can these companies kind of guide on that? And will they really hold onto that Easter deadline if it shows up in the next few weeks that we really won't be able to get past it that quickly?

ADAM SHAPIRO: And we should point out, Brian, Ford shares right now, they are trading higher, but you can get a share of Ford right now at $5.40 and change. This is pretty low.

I recall during the Great Recession, although Ford did not take the government bailout, Ford shares were trading just a bit over $1 at that time. And of course, yesterday S&P cut Ford's bonds to junk status. So we're going to keep an eye on what Ford is planning to do.