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Factories Are Reopening, But For How Long? Why Coronavirus Disruptions Will Continue for Stocks

By Howard Smith – May 21, 2020 at 11:30AM

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Tesla pushed local officials to reopen; now a Ford plant restart highlights the struggles manufacturers will have to address as production resumes.

As manufacturers around the country begin to restart operations amid the COVID-19 pandemic, a Ford Co. (F -2.25%) plant has been forced to quickly shut back down and quarantine infected workers. The workers didn't contract the virus at work, and the Chicago assembly plant quickly reopened, but this highlights the challenges facing factories and businesses working to resume operations.

Just last week, Tesla (TSLA 1.04%) restarted its Fremont, California factory, against orders from local officials. CEO Elon Musk admitted on Twitter that he was violating Alameda County rules. He Tweeted that he'd be joining assembly line workers personally, saying "if anyone is arrested, I ask that it only be me." County officials eventually agreed that the Tesla facility could ramp up operations. New practices and protocols across American businesses will determine if companies see a smooth reopening, or if investors are along for a bumpy ride. 

factory workers wearing ppe including face masks

Image source: Getty Images.

New practices and procedures

When Tesla called back workers, HR executive Valerie Capers Workman told employees, "we are well-prepared to proceed safely and in alignment with all government precautions and the county's requested safety measures." General Motors (GM -2.27%) and Ford have both put out detailedsafety plans for reopening. 

GM said it based its plan on the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) guidelines, as well as experience from other plants around the world that have reopened. GM's focus was to "develop a robust, multilayered protection approach, custom tailored for each of our facilities." 

Tesla's Musk said that its Shanghai plant had already shown there are proper policies that can be put in place to safely reopen. Ford has taken the same approach, saying "the standards and precautions introduced this week expand on those used in Ford facilities in China, where work has already resumed, and in the U.S., where Ford has been manufacturing medical equipment for weeks."

Investors should be prepared

Investors, however, should be ready for fits and starts. The recent outbreaks at several food processing facilities show that the workplace can be infected quickly. Ford quickly shut its newly opened Chicago assembly plant twice, and then reopened it within 24 hours, according to CNBC. Auto workers from different shifts tested positive for COVID-19, and the company put its safety practices to work. 

The employees were asked to self-quarantine for 14 days, and their workplaces were deeply cleaned and sanitized, according to the report. Ford anticipates increased employee absenteeism as its facilities restart. The company has hired an additional 1,300 workers to account for that, the Detroit Free Press reports. 

Will it work? 

Some industries will be easier to operate safely than others. While COVID-19 is still with us, and until there's a vaccine, it will be up to management to create safe work practices and protocols, as well as individual responsibility at both work and home, to keep businesses open and employees healthy. 

Investors typically consider quality of management as one factor when buying a stock. It would be worthwhile to focus on how businesses of all kinds plan to operate successfully in this environment. How the situation progresses, and how businesses and workers react, will play a role in whether, or how quickly, businesses can resume growth. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
$11.72 (-2.25%) $0.27
General Motors Company Stock Quote
General Motors Company
$34.24 (-2.27%) $0.80
Tesla, Inc. Stock Quote
Tesla, Inc.
$278.89 (1.04%) $2.88

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