Fiat halts some Italian plants, Volkswagen’s Seat mulls sending Barcelona staff home

By Joan Faus and Giulio Piovaccari

BARCELONA/MILAN (Reuters) – Europe’s major car and parts makers rushed on Wednesday to close factories and cut output in Italy and considered sending workers home elsewhere, in the first signs that coronavirus is disrupting the region’s struggling automotive industry.

Fiat Chrysler said it was temporarily halting operations at some of its Italian factories and would reduce production in response to Europe’s largest coronavirus outbreak.

The Italian-American carmaker has stepped up measures across its facilities, including intensive cleaning of all work and rest areas, to support the government’s directives to curb the spread of the infectious disease.

Italian tyremaker Pirelli said it was cutting production for several days at its Settimo Torinese plant in northern Italy after a worker tested positive for the virus.

Italy is the worst-affected country in the world after China and the unprecedented lockdown of the country has heaped fresh pressure on the region’s ailing car sector.

Other companies including Britain’s biggest carmaker Jaguar Land Rover and Peugeot owner PSA were also scrambling to deal with infections among staff, highlighting the risks to business beyond supply chains and Italy’s borders.

The French carmaker was beefing up safety rules on Wednesday at its Mulhouse plant with a 5,000-strong workforce in eastern France after one employee tested positive, a spokeswoman said. The man has been on sick leave since Feb. 29.

The actions come as Seat, the Spanish unit of German carmaker Volkswagen , was considering sending staff home temporarily from its Barcelona-area plant due to issues with supplies.

“The Martorell plant is currently working normally. However, there are several risks derived from COVID-19, which has affected the supply chain,” a Seat spokesman said.

BRAKES ON

The disruptions are the latest blow to Europe’s car makers, which are struggling with weak global demand and high costs of meeting the region’s tough emissions targets.

The virus has already taken its toll on business in China, the world’s top car market, where vehicle sales tumbled last month as customers stayed home due to the epidemic.

An industry association warned last week that car sales in Italy, Europe’s third-largest economy, could shrink by more than 15%.

Seat would make temporary layoffs if it had to cut production due to supply issues, the spokesman said.

Seat union representative Matias Carnero said the company’s supply chain was being affected by the worsening coronavirus outbreak.

“It all looks like it is going to be requested,” said Carnero, a representative for UGT, the main labor union at Seat, referring to the potential temporary layoffs.

Under temporary layoffs, Spanish workers are normally paid part of their salary.

The company spokesman said the duration of these layoffs had not been discussed yet, but Carnero said they could last between two and five weeks, adding that this could potentially affect about 7,000 people at the plant.

Italian brake maker Brembo warned on Tuesday that its northern Italian production could struggle if the government introduced even more stringent measures to tackle the spread of the coronavirus.

(Additional reporting by Ingrid Melander in MADRID and Gilles Guillaume in PARIS; Writing by Josephine Mason; Editing by Inti Landauro and Keith Weir)