From Volkswagen to PSA, coronavirus pandemic shuts European car factories

European car makers from PSA Group to Volkswagen AG are shutting down production across the region as health concerns over the coronavirus pandemic and border restrictions snarling trade hurt their ability to run plants and get supplies.

Peugeot maker PSA said Monday it will gradually close all European production sites this week starting with Mulhouse in France, citing “serious" Covid-19 cases near some sites, supply disruptions and a sudden decline in auto markets.

At Volkswagen, a spokesman said by phone that restricted access to sites, particularly in hard-hit areas like Italy and Spain, have complicated the movement of parts and finished cars. Fiat Chrysler Automobiles NV is also winding down output at some of its factories.

Volkswagen, the world’s largest automaker, said impact from production stops, including in Spain and at its Lamborghini site in Italy, are starting to ripple out to plants including its U.S. factory in Chattanooga, Tennessee. Earlier Monday, Fiat Chrysler said its Italian unit and the Maserati brand would suspend production in Europe. Renault-Nissan has halted output at its Barcelona site in Spain as well.

The PSA factory halts will include plants in France, Spain, Germany, the U.K., Poland, Portugal and Slovakia, and will be carried out between March 16 and March 19, according to the statement. They coincide with a tightening of confinement measures by European governments including a shutdown of many stores, schools and restaurants in France.

European countries including Germany have tightened border controls to stop the spread of the coronavirus, though they’ve so far allowed goods to traverse freely. Governments across Europe have restricted internal movements, while many workers are staying home, slowing the pace of output.

Volkswagen's plant in Portugal started measuring the temperature of truck drivers at factory gates.

After the Portuguese government’s decision to close schools Volkswagen’s factory moved to use “down days" flexibility tool to allow workers to assist their families without losing compensation. With absences expected from the night shift of March 16 the site suspended Monday’s production shifts, according to a statement.

Volkswagen, Europe’s largest industrial company, is set to provide an update on its business prospects at its annual earnings press conference on Tuesday. The manufacturer employs some 670,000 people at 122 factories across the globe.

Chief Executive Officer Herbert Diess told Bloomberg TV on Friday that the Chinese market has started to recover, but the situation in Europe remains difficult to predict and warned that closed borders could trigger factory shutdowns.

Volkswagen’s management board and top labor leaders have called on workers to prepare for more difficulties ahead, according to a letter to staff seen by Bloomberg. “The next weeks will be strenuous, maybe hard as well," Diess, works council head Bernd Osterloh, his deputy Daniela Cavallo as well as Volkswagen personnel chief Gunnar Kilian, said in the letter. “But as Volkswagen team we can hold our ground together."

Labor union IG Metall and employer organization Suedwestmetall on Monday postponed a meeting to discuss wage demands in upcoming collective bargaining talks for the metals and electronics industry in the German state of Baden-Wuerttemberg. The region is home to the headquarters of Daimler AG, Robert Bosch GmbH and Porsche AG.

It currently takes priority to find solutions for the many employees that are affected by shorter working hours, factory shutdowns and school closings, the union and Suedwestmetall said in a joint statement.