Honda extends U.S. furloughs to thousands of salaried staff

Honda will reportedly continue to pay for furloughed employees’ medical care and other benefits, and they’ll be eligible for state unemployment benefits.
| Updated on: 16 Apr 2020, 09:18 AM
File photo (REUTERS)
File photo (REUTERS)

Honda Motor Co. plans to furlough several thousand salaried employees and support staff in the U.S. for two weeks, expanding cost-cutting measures that initially affected only production workers.

While many car makers have cut executive salaries and temporarily laid off their factory workforce amid the coronavirus pandemic, salaried-worker furloughs have been relatively rare.

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Honda will continue to pay for furloughed employees’ medical care and other benefits, and they’ll be eligible for state unemployment benefits, according to a spokesman.

(Also read: Honda deploys its minivans to transport coronavirus patients in Japan)

“Stay-at-home orders in many cities and states prevent consumers in a number of markets from purchasing new vehicles," Honda said in a statement announcing both the furloughs and the extension of shutdowns at plants in Mexico. “As a result, Honda must continue to suspend production in order to align product supply with a lack of market demand."

Honda employs about 31,000 people in the U.S., and it previously furloughed some 16,900 mostly hourly workers at auto parts and vehicle assembly plants in the country. About 75% of its workforce is involved in manufacturing, with the remainder in finance, sales and research-and-development roles.

The Japanese automaker will furlough the majority of its white-collar staff in California starting April 17, followed by other locations from April 19. The shares of Honda fell as much as 4.2% in early Tokyo trading on Thursday, outpacing the broader Topix index. The stock is down by more than a quarter this year.

In March, Honda’s U.S. sales plummeted 48% from a year ago. With most states having ordered auto dealerships to close completely or allowing only remote sales, demand is expected to be even worse this month across the industry.

Honda said it will prolong the shutdown of its auto parts and vehicle plants in Mexico through the end of the month, aligning the timeline for those facilities with factories in the U.S. and Canada.

First Published Date: 16 Apr 2020, 09:18 AM IST

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