Japanese car giants Honda and Nissan stand down US workers

Two of Japan’s largest car companies, Nissan and Honda, are furloughing US factory workers without pay.

Employees work on an assembly line at a Honda factory in Wuhan, China. Picture: AFP

Two of Japan’s largest car companies, Nissan and Honda, are furloughing US factory workers without pay, adding to unemployment in an industry that has seen sales plummet during the spread of the coronavirus.

Nissan said on Tuesday it would place about 10,000 US hourly workers employed at plants in Tennessee and Mississippi on furlough until later this month, calling the move a “temporary lay-off”.

Honda also this week notified staff that it would furlough about 14,400 factory employees in the US as it extended a production shutdown until May 1.

Affected workers at Honda and Nissan can apply for enhanced unemployment benefits from the government. Both companies said the workers would ­retain benefits such as healthcare.

Nissan workers stopped receiving pay cheques on Monday, except for a handful deemed ­essential, a Nissan spokeswoman said. She declined to say how many of the workers would be rehired, although Nissan has said that rebuilding sales in the US is a key part of its plan to reverse years of declining revenue and profit.

At Honda, the company would pay workers’ wages for part of this week and allow them to use paid time off to cover the rest, a spokesman said.

The US has had record jobless claims after many cities locked down to block the virus’s spread.

Manufacturers, and particularly carmakers, have been among the worst hit. The auto industry shut down nearly all US production in March. Combined, General Motors, Ford and Fiat Chrysler have laid off about 150,000 hourly employees.

While workers at the Detroit carmakers may draw some protection from their union contracts, factory workers at most foreign carmakers in the US aren’t unionised. Japanese carmakers typically are loath to lay off US workers, and have used that as a justification for the lack of union representation at their plants in the country.

Toyota had not furloughed any workers despite idling production last month, a spokesman said, adding that production workers would receive full pay this week and could then use paid time off the following week.

Toyota’s US plants are slated to reopen on April 20.

In March, US car sales fell nearly 40 per cent from a year ­earlier, according to MarkLines, a Japanese automotive data firm. Nissan’s sales fell 48 per cent. Honda also reported a 48 per cent decline in US sales last month as shelter-in-place orders took effect in many states, causing business to drop off sharply.

In February, Nissan announced its first quarterly loss since 2009. It is working on a recovery plan, but those efforts have been clouded by the virus pandemic. As a result, Nissan is hoarding cash. Workers in Spain also have been laid off. Outside of China and some plants in Japan, all of Nissan’s manufacturing ­facilities are closed.

As news of the US furloughs broke, Nissan executives were briefing board members on the details of their response to the pandemic. One person familiar with the discussions said Nissan was looking at ways to obtain loans from governments in Japan, the US and Europe, as well as ­tapping banks.

Nissan management was also looking at pay cuts, said people familiar with the discussions. Chief executive Makoto Uchida and his deputy, Ashwani Gupta, are expected to forgo performance-based pay.

Executives say Nissan isn’t in immediate danger of running out of cash, and analysts have described the company’s balance sheet as relatively healthy, assuming the shutdown doesn’t last more than a few months.

Nissan has assembly plants in Smyrna, Tennessee, and Canton, Missouri. Most of the furloughed workers are expected to return to work on April 27. Workers at ­Nissan’s engine plant in Decherd, Tennessee, are expected to resume work on April 24.