Michigan Covid Surge Threatens Key Truck Plant for Stellantis

The coronavirus outbreak in Michigan, which has emerged as the worst U.S. hotspot, is surging in a critical factory for Stellantis NV’s Ram pickup truck with an estimated 10% of production employees out for Covid-related reasons.

About 630 production workers were absent on Tuesday because they’d either tested positive for Covid-19 or were in quarantine, according to three people familiar with the matter, who declined to be identified. That’s up by roughly 200 workers from a week ago, one of the people said, and represents roughly a tenth of production workers at SHAP, as the plant in Sterling Heights, Michigan, is known.

The uptick in Covid cases and subsequent quarantine requirements is one of several factors slowing production for one of Stellantis’s most profitable vehicles. The Ram plant fell short of its daily build number by between 200 and 300 vehicles this week, according to one of the people.

The challenges underscore the lingering impact of the pandemic for businesses trying to return to normalcy, particularly at places where workers have to be on-site, like assembly lines, and maintain social distancing and masking.

Stellantis continues to be “vigilant” in enforcing the health and safety protocols it developed last year and is following guidelines on contact-tracing at the plant, the company said.

“As Covid cases are increasing in communities across Michigan, we also have had employees test positive,” spokeswoman Shawn Morgan said in a statement. “We also continue to strongly encourage our employees to follow the same health and safety measures whenever they are out and about. Additionally, we have been strongly advocating that our employees get vaccinated and have been facilitating vaccine administration for our employees in the Metro Detroit area.”

Both Stellantis and the United Auto Workers union, which represents workers at SHAP, declined to comment on the exact number of Covid-connected absences.

“While the numbers change by shift, we can say that there is a recent increase in cases, as there is throughout Michigan,” said Cindy Estrada, a UAW vice president and director of the department representing Stellantis workers. Many of the absences are people in quarantine or awaiting results -- and not necessarily infected by Covid-19, she said.

Read More: U.S. Virus Tracker: Cases Rise 0.2%; Michigan Up 1.1%

Michigan had 55,091 new Covid cases in the last seven days, the biggest jump in the country and 25% more than Florida, which had the second-biggest increase, according to the CDC.

The surge could not come at a worse time for Stellantis, formerly known as Fiat Chrysler, which has idled half of its 10 North American plants this month due to the global shortage of semiconductor chips. The company has been hoarding chips to keep production going at SHAP, which makes the newer, pricier version of the Ram 1500 pickup.

The new Jeep Wagoneer and Jeep Grand Wagoneer, meant to elevate Jeep into the luxury segment, are supposed to ramp up production this summer at its plant in Warren, Michigan, which is currently idled due to the chip shortage.

The company sold 563,676 Ram pickups in the U.S. last year, built in three different plants. It outsold its fierce rival, the Chevrolet Silverado, in the first quarter of 2021.

High Stakes

“That is a high-priced product with a lot of profit baked in,” said Sam Fiorani, vice president at AutoForecast Solutions in Chester Springs, Pennsylvania. “It’s a very important plant now for Stellantis.”

Having 10% of production workers out of commission on a given day doesn’t seriously threaten production at SHAP, but it does slow it, Fiorani said. There’s a constant flow of temporary labor and workers from other idled plants coming to fill in for absent employees.

“They normally deal with a large number of absenteeism, especially during Covid, so they’re prepared for the ups and downs within the factory,” he said. “But keeping the factory humming along enough to keep it full speed would be difficult with that many temporary workers,” who need to be trained to ensure speed and quality, he said.

The total number of hourly workers at SHAP, including maintenance and skilled trades personnel, is 7,450, according to the company website.

Vaccine Plea

More contagious variants, widespread pandemic fatigue, and large numbers of people who have never been exposed to Covid-19 have created a critical infection situation in Michigan, Governor Gretchen Whitmer told CBS’s “Face the Nation” on April 11. The governor has pleaded unsuccessfully with President Joe Biden to send more vaccines to the state, which was key in securing his election victory. On Wednesday, Whitmer refused to re-impose restrictions on the economy to tamp down the latest surge of infections.

At the same time, vaccine hesitancy and a lack of easy access to vaccination sites for some Detroiters has kept the city’s vaccination rate at 27%, compared with 42% at the state level and a 31% rate nationally, according to state records and data collected by Bloomberg. Sterling Heights is about 30 minutes north of downtown Detroit, and many of the workers live in the city.

Safety Steps

Detroit automakers were forced to idle plants for two months last March amid nationwide lockdowns and walkouts from workers fearful of infection. They reopened in May after a task force made up of auto executives, union leaders and government officials hammered out safety protocols.

Those protocols include daily cleaning, temperature checks, staggered start times, and mandatory masks and safety glasses.

The entire auto industry has been struggling with higher rates of absenteeism since the pandemic started, with workers still hesitant to return because of a lack of childcare and fear of contracting the virus. Financial aid from the government in the form of stimulus checks has also reduced the incentive for some workers to risk going back to work.

©2021 Bloomberg L.P.

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