Coronavirus-Closed Factories in China Face Delays in Restarting as Authorities Flip-Flop

Date: Thursday, March 12, 2020
Source: The Wall Street Journal

Authorities push back the restart date for most plants to the end of next week

Most factories in Hubei province won’t be allowed to resume operations through March 20, the provincial government said Wednesday, dealing a delay to businesses in the region at the center of China’s coronavirus epidemic struggling to return to normal.

However, companies that perform essential tasks such as producing food can resume work immediately if they haven’t already done so, the authorities said, as can firms “that have a significant impact on supporting the national and global industrial chain,” provided they have the necessary approvals. That may include some of the numerous auto plants in and around Wuhan, the provincial capital, which play a critical role in the regional economy. Earlier, authorities had said companies in the region could restart business on March 11.

But most car plants and other factories in Hubei, which stopped operations for the Lunar New Year holiday in late January, continued to sit idle on Wednesday.

The delay highlighted the complexity of rebooting supply chains and getting thousands of workers back onto factory floors, despite progress in checking the spread of the coronavirus in China.

On Tuesday, Chinese President Xi Jinpingvisited Wuhan for the first time since the outbreak began in late 2019, signaling the government believes it has brought the crisis under control. The city is now reporting only a handful of new cases daily, down from nearly 2,000 a month ago. Some 67,000 of China’s 80,000 cases occurred in Hubei.

But some regional efforts to restore normality have stumbled. On Wednesday, Qianjiang, a city 100 miles west of Wuhan, announced that it was reopening public transport systems and allowing private vehicles back onto the city’s roads, while encouraging businesses to get back to work. However, the authorities rescinded the order within hours. In fact, “strict traffic control and personnel control” remained in force, they said.

Hubei is one of China’s main logistical hubs, as well as an important base for several heavy industries. The centrally located region is home to roughly a tenth of the country’s car-producing capacity.

The auto sector is desperate to crank up production and get customers back into dealerships after an unprecedented slump in sales. Passenger-car sales fell 78.5% last month on year, according to the China Passenger Car Association; and while 70% of auto companies had restarted by the end of February, they were operating at 20% of production capacity.

Among the hardest hit is Dongfeng Motor Corp., one of China’s biggest state-run auto makers, which is based in Wuhan. It operates several of its own factories in the area as well as local joint-venture plants with Honda Motor Co., Nissan Motor Co., Peugeot SA and Renault SA. General Motors Co. also operates a plant in Wuhan with its partner, Shanghai-based SAIC Motor Corp.

All three of Honda’s joint-venture car plants with Dongfeng are located in Wuhan. Honda said Wednesday that it had started to allow some employees to return to its plants in Wuhan, and that it had begun small-scale production while conducting equipment checks.

An engineer who works for Dongfeng Honda Automobile Co. in Wuhan, where he has been under lockdown in his apartment since Jan. 23, said local authorities gave Dongfeng Honda and some of its key suppliers permission to restart production Monday . But other obstacles remain, he said—thousands of workers remain stranded outside Hubei, and with Wuhan’s mass-transit networks still closed, many workers who are in the city can’t travel to the factories, he said.

Moreover, people are prohibited from traveling between city districts unless they have special permits, making it impossible for workers who live in a different district from their factory to clock in. The authorities haven’t said when the restrictions might be lifted.

Starting Sunday, Dongfeng Honda will provide special buses to get enough workers to start the plant, the engineer said, adding the company has obtained special permission.

A spokeswoman for Nissan said the company was planning to restart production this week at its factory in Xiangyang in Hubei and at a second plant in Zhengzhou in Henan province.

A Renault spokesperson said the company is tentatively aiming to resume production on Monday , subject to approval from the authorities and from its partner, Dongfeng.

A Dongfeng representative said the company is preparing to restart its production lines but the timing remained unclear, and that it would abide by local regulations.

General Motors and Peugeot didn’t respond to questions about when their Hubei factories would resume operations.


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