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Fearing for Suppliers, German Automakers Push Merkel to Reopen

By John Rosevear – Apr 2, 2020 at 9:33AM

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BMW, Daimler, and VW are worried about their supply chains.

German Chancellor Angela Merkel and executives at Germany's automakers are pondering when and how to restart automotive production, amid fears that some key suppliers may not have the cash to wait out the coronavirus pandemic. 

Germany's Handelsblatt business newspaper reported on Thursday that the CEOs of Volkswagen (VWAGY -0.68%), Daimler (DMLR.Y -1.52%), and BMW (BMWYY -0.91%) (BAMXF -6.08%) held a conference call with Merkel on Wednesday night to discuss potential plans.

The immediate problem: While the German automakers all have adequate liquidity to survive for a while, some of the industry's suppliers will be in danger of failing if factories aren't reopened soon.

Diess is shown speaking at VW's annual conference in March 2020.

Volkswagen CEO Herbert Diess said that his company is burning over $2 billion a week. Image source: Volkswagen AG.

The German government's concerns are centered on workers' health, according to reports. Merkel and the CEOs discussed ways in which the automakers could minimize the risk of spreading the virus from worker to worker once factories are restarted.

The health concerns echo those heard from the United Auto Workers labor union and U.S. automakers. Ford Motor (F -0.67%) said earlier this week that it has postponed a prior plan to restart a few of its factories in the U.S. and Mexico this month, in part because of the UAW's worries about worker safety. 

The German automakers will come under intense pressure to cut jobs if factories aren't restarted soon. Volkswagen CEO Herbert Diess said last week that while his company doesn't want to cut jobs, it's currently burning about 2 billion euros ($2.2 billion) a week, an unsustainable rate.

John Rosevear owns shares of Ford. The Motley Fool recommends BMW. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Volkswagen Aktiengesellschaft Stock Quote
Volkswagen Aktiengesellschaft
VWAGY
$18.20 (-0.68%) $0.12
Ford Motor Company Stock Quote
Ford Motor Company
F
$11.91 (-0.67%) $0.08
Bayerische Motoren Werke Aktiengesellschaft Stock Quote
Bayerische Motoren Werke Aktiengesellschaft
BAMXF
$69.50 (-6.08%) $-4.50
Bayerische Motoren Werke Aktiengesellschaft Stock Quote
Bayerische Motoren Werke Aktiengesellschaft
BMWYY
$22.89 (-0.91%) $0.21
Daimler AG Stock Quote
Daimler AG
DMLR.Y
$12.98 (-1.52%) $0.20

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