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Pandemic Lessons: XPO’s 160 Closings, Masks for Warship Builders

Pandemic Lessons: XPO’s 160 Closings, Masks for Warship Builders

(Bloomberg) -- Everyone at XPO Logistics Inc. knows the drill if an employee at one of its warehouses contracts Covid-19: The facility shuts down, workers go home for as many as three days, and specialized cleaners swarm in to sanitize the building.

Since the pandemic struck, it’s happened about 160 times.

Pandemic Lessons: XPO’s 160 Closings, Masks for Warship Builders

“It’s a skill set that we never thought that would ever be in our wheelhouse,” said Chief Executive Officer Brad Jacobs, whose company has about 100,000 employees in the U.S. and Europe. “Now, we’ve gotten very good at it.”

Large industrial companies like XPO, General Dynamics Corp. and Honeywell International Inc. have kept operations running during America’s widespread lockdowns -- often with costly disruptions to prevent the spread of the coronavirus. While their efforts are crucial to keeping workers safe and avoiding the types of devastating outbreaks hitting meatpacking plants, they also show the challenges for other manufacturers as they slowly resume production.

Pandemic Lessons: XPO’s 160 Closings, Masks for Warship Builders

Every new case can bring shutdowns. Factories have to install barriers and halt production lines between shifts to keep people apart. Some have modified buildings to take out turnstiles or install automatic doors to reduce touch points. Absent national standards, companies are left to navigate their own solutions, a task all the more difficult for smaller manufacturers that may struggle to afford making dramatic changes after a plunge in revenue.

“The problem is there’s such a patchwork and no protocols,” said Diane Swonk, chief economist at Grant Thornton and a fellow at the National Association for Business Economics. “Everyone’s dealing with their own efforts to both keep workers safe and minimize lawsuits.”

Although the list of essential businesses varies by state, most transportation providers, chemical makers, food producers and companies tied to defense and energy have been allowed to operate through shutdowns. States including Pennsylvania, California and Michigan have started to lift restrictions on other types of manufacturing, bringing thousands of employees back over the coming days and weeks.

Masks, Thermometers

The path toward reopening goes beyond added safety measures. With the virus still raging and schools shut, manufacturers face the prospect of absentee workers, diminished productivity and difficulties procuring personal protective equipment, or PPE.

At General Dynamics, the construction of naval submarines, ships and business aircraft hasn’t stopped. The company is using thermal imaging technology to check temperatures, along with requiring masks and keeping people six feet apart. But employee disruptions and starts-and-stops at factories have had an effect, said CEO Phebe Novakovic.

“So far we have experienced some deterioration in efficiency, driven by absenteeism at a couple of our facilities,” Novakovic said in an April 29 conference call. “We are also incurring rather significant cost to sanitize the work environment in our facilities and to provide additional PPE.”

Still, Novakovic said the efforts have been successful and absenteeism is expected to improve because of the company’s low infection rate. At General Dynamics’ Electric Boat unit, there have been 42 confirmed cases out of a workforce of about 17,000. At a facility in Bath, Maine, that makes ships for the U.S. Navy, just two of 1,600 workers tested positive.

Pandemic Lessons: XPO’s 160 Closings, Masks for Warship Builders

Emerson Electric Co. has kept its factories running except for the temporary shutdowns, and as of Monday had about 84 Covid-19 cases among its 88,000 employees and none of its 240 facilities closed. Beyond sanitizing, a lot of small things seem to be working, Chief Operating Officer Steve Pelch said in an interview.

The electrical-equipment maker has put up plexiglass barriers, closed production lines for cleaning between shifts and set up hand-washing stations outside of factories. It’s doubled up the buses in those areas where it provides transportation to allow workers to distance themselves.

XPO, a warehouse and trucking company, is paying for Covid-19 tests, raised wages of hourly workers by $2, added two weeks of sick leave for the pandemic and provided a telemedicine option. Although the measures have driven up costs, they’ve limited cases and motivated employees to show up for work, Jacobs said.

Varied Challenges

The challenges vary by industry. Large companies like XPO and General Dynamics must navigate operations where people normally work closely together in confined spaces. Automakers, when they resume, have to work with a complex supply chain of thousands of parts. Meat processors have heightened sanitation issues for slaughtering animals, and are now dealing with widespread shutdowns and supply shortages after thousands of cases at plants.

Every industry that has been designated as essential has had workers fall victim to the disease, Richard Trumka, president of the AFL-CIO labor union, said in a Bloomberg TV interview. He called for the Occupational Safety and Health Administration to adopt emergency contagious disease standards for employees and make companies abide by those rules, he said.

“When workers feel that they have a plan, when they’ve been educated and they have the proper PPE on hand, then they’re going to want to go back to work,” Trumka said. “Until then, they’re not going to go back to work and nobody can blame them.”

OSHA said its existing enforcement authority and Covid-19 guidance, coupled with guidelines from the Centers for Disease Control and Prevention, are sufficient. So far, it has received more than 3,300 virus-related complaints directly and another 8,300 through states.

“Employers are and will continue to be responsible for providing a workplace free of known health and safety hazards,” a spokesperson said in an e-mailed statement.

Multinational companies like Honeywell benefit from having operations in China, where the outbreak began and offered early lessons. Honeywell has seen “very few” infections around the world, CEO Darius Adamczyk said in a May 1 conference call. The company is taking temperatures, staggering shifts, cleaning frequently and arming workers with protective gear, some of it made by the company itself. It recently added 1,000 jobs to begin production of N95 masks in Rhode Island and Arizona.

Pandemic Lessons: XPO’s 160 Closings, Masks for Warship Builders

Smaller manufacturers will face bigger challenges as they return, said Grant Thornton’s Swonk. They don’t have the advantage of having learned from China operations, nor the deep pockets to absorb the extra expenses and drops in productivity tied to containing outbreaks.

“We can make these spaces much more safe,” said Swonk. “But that requires a lot of effort and a lot of cost.”

©2020 Bloomberg L.P.