A growing number of shelter-in-place orders is crimping automotive supply chains, forcing South Carolina's vehicle manufacturers to temporarily close multiple factories as the coronavirus pandemic takes a toll on sales and potentially workers' health.
BMW, which operates a sprawling campus in the Upstate, originally planned to shut down on April 3. On Wednesday, the German automaker moved that date up to Sunday.
"The coronavirus pandemic has resulted in a very dynamic situation," BMW said in a statement. "We've had to adjust our plans accordingly. Shelter-in-place orders in individual states have disrupted the supply chain sooner than anticipated. Consequently, BMW Plant Spartanburg will close for a two-week period beginning Sunday through April 12."
Mercedes-Benz Vans, which builds Sprinter vans at its North Charleston plant, began winding down production on Monday for an at least two-week shutdown. The company said it is following the recommendation of health and government authorities and will "take further measures as required" to help contain the spread of the virus known as COVID-19.
"The employees' health and safety has top priority at Mercedes-Benz," the company said in a statement. "Therefore, the halt of production and administration is a measure to ensure this and to further contain the spread of the pandemic. Wherever essential work is necessary, the company will continue operations in coordination with the respective authorities. All appropriate precautions to prevent the infection of employees will be taken."
Volvo Cars, which builds S60 sedans at its plant off Interstate 26 near Ridgeville, said it will halt production Thursday through April 14.
"Our primary concerns are the health of our employees and the future of our business," said Hakan Samuelsson, Volvo's chief executive. "With the help of valuable supporting programs put in place by governments and authorities, we have been able to act quickly."
Staff in Volvo's offices will work from home starting Thursday and work hours will be reduced. Travel restrictions have already been in place.
"These actions will secure jobs and ensure that Volvo Cars can come back to normal production as soon as it is possible and safe," the company said in a statement.
Volvo and Mercedes-Benz Vans employ roughly 2,500 workers combined in the Lowcountry.
Laura Ullrich, regional economist with the Federal Reserve Bank of Richmond, said shutdowns will likely ripple throughout South Carolina's large network of automotive suppliers. South Carolina's auto industry accounts for $27 billion in annual economic impact and employs roughly 72,000 workers.
"For those companies, even if they weren’t planning on shutting down, they’ve certainly seen a change in demand," she said, adding that as Volvo and others shut down they're not going to need products from suppliers.
Robert Bosch LLC, which makes fuel injectors and anti-lock braking systems in Dorchester County, told employees on Monday that "the COVID-19 crisis remains very fluid, and it requires significant adjustments every day."
"We hope that an extended shutdown will not come to pass, but we must be prepared for this possibility," the company said in a memo to workers.
Ullrich said the two-week shutdowns automakers are currently initiating might not result in a huge financial hit.
"The question right now is how long does that actually last," she said, adding she expects to see manufacturing layoffs register in unemployment figures released Thursday.
Bobby Hitt, head of the S.C. Commerce Department, said South Carolina's automotive manufacturers plan to pay workers between 80 percent to 90 percent of their normal wages while the shutdowns are in effect.
"They've done a pretty good job of recognizing and protecting their associates," he said.
It's too early to determine the long-term impact the shutdowns will have on the Palmetto State's economy. The rise of e-commerce could buoy Mercedes-Benz Vans, which makes last-mile delivery vehicles for online retailers like Amazon.
Automakers like Volvo and BMW, which rely on consumer purchases, could see fewer sales after the coronavirus crisis ends.
"A loss of sales is a loss of production," Hitt said. "Companies right now are tying to figure out what impact this is going to have on the sales end of the market and, therefore, what impact it will have on the production end. Assuming it's only a matter of weeks, i don't think it will be dramatic."
Earlier this month Volvo Cars reopened its four manufacturing plants in China after an extended closure period. Showroom traffic appears to be returning to normal in China's car market, the company said.
German automaker BMW previously announced factory closures in Europe and South Africa through April 19 because of the coronavirus.
"The health and protection of our associates is our top priority," BMW said in a statement. "At the same time, the dynamic development of the corona pandemic is having a major impact on the global demand for cars. BMW Manufacturing is taking a flexible approach and adjusting our production volumes accordingly."
Bloomberg reported last week that the Upstate plant is having trouble getting engines and other parts from overseas.
"BMW imports many key components such as engines and transmissions from Europe, where production has virtually ground to a halt due to the spread of the coronavirus," Bloomberg reported. "The outbreak has also dampened demand in the U.S., where J.D. Power estimates sales may fall as low as 14 million vehicles this year from 17 million in 2019."
CEO Oliver Zipse said last week that sales and profits are expected to tumble as the virus spreads throughout Europe and North America, but he's hopeful the worst will be over by the second half of this year.
BMW’s Upstate plant, which employs roughly 11,000 workers, remained the nation’s top vehicle exporter in 2019, retaining a title it’s held for six years by sending $9.6 billion worth of South Carolina-made X-model SUVs to foreign countries. Most of the 246,014 vehicles the German automaker shipped from its Spartanburg County campus in 2019 were moved through the Port of Charleston.
The coronavirus, which started showing up in China earlier this year and has now spread throughout the world, didn't appear to hurt exports last month. The State Ports Authority reported 17,418 vehicles — mostly BMWs — left Columbus Street Terminal in Charleston last month. That's a mere eight more cars than the same period a year ago.
Several other automakers reported coronavirus-related shutdowns at U.S plants earlier this week, including: General Motors Co.; Ford Motor Co.; Fiat Chrysler Automobiles NV; Hyundai Motor Co.; Honda Motor Co.; Toyota Motor Corp. and Volkswagen AG.