Coronavirus: Daimler to restart German factories from April 20th

Coronavirus: Daimler to restart German factories from April 20th
File photo shows a Daimler employee at the Mercedes-Benz plant in Stuttgart. Photo: DPA
Mercedes-Benz maker Daimler said Wednesday it plans to restart work at factories in Germany from April 20th, after a weeks-long interruption due to the coronavirus pandemic.

“In a few selected factories, we are implementing a coordinated restart of production,” the group said in a statement.

“From April 20th this will affect the car motor factories in Germany, Mercedes-Benz car factories in Sindelfingen and Bremen and the vans factories.”

Truck and bus sites will also open from the same date.

Germany has ordered strict measures, including a ban on gatherings of more than two people in public, to stem the spread of the coronavirus pandemic.

Measures have been introduced since the beginning of March, but stricter controls came into force on March 22nd and are scheduled to be in place up to and including April 19th.

But Daimler also said that it would extend shorter hours (known in German as Kurzarbeit) for its workers in Germany until April 30th, impacting “the majority of production… as well as administration”.

In the first quarter, Daimler's worldwide sales slumped 15 percent year-on-year, with Mercedes-Benz cars alone seeing a 20-percent drop in China and 16 percent in Europe.

READ ALSO: Kurzarbeit: Germany bets on tried-and-tested tool for coronavirus jobs crisis

Coronavirus “heavily impacts sales on a global scale,” finance chief Harald Wilhelm said in a conference call Wednesday, adding “the overall economic impact cannot yet be assessed with sufficient certainty”.

Wilhelm nevertheless said that Daimler is well positioned to weather the blow.

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Car sales falling fast

Meanwhile Volkswagen said Wednesday that it would begin increasing production from April 14th in “a few” factories building car components, which are currently operating at much reduced capacity.

Most of the auto behemoth's sites are closed until at least April 19th, but the group wants “to safeguard the supply of components to plants in China” after the Easter weekend.

READ ALSO: When and how will Germany's lockdown measures end?

“Further details of the mode of operation are expected after Easter” for other components and vehicles sites, VW said.

Daimler rival BMW said Tuesday that it would extend a production stop until April 30th, while Ford's European factories are on hold until at least May 4th.

Car sales plummeted in several European countries in March as far-reaching restrictions on daily life to limit the spread of the coronavirus bit.

Experts expect still-worse performance in April, while ratings agency Moody's forecast a 14-percent contraction in the global car market for 2020 as a whole.

But the picture is brightening in Asia, with “significant growth in demand” in China and South Korea, Mercedes-Benz sales director Britta Seeger said in a statement.

BMW also sees “first signs of a rebound” in China, sales chief Pieter Nota said Tuesday.

'Serious recession'

The coronavirus pandemic is heavily impacting business in Germany.

The German economy, which is Europe's biggest, is expected to shrink by nearly 10 percent in the second quarter, leading research institutes have warned, reported AFP.

“The corona pandemic will trigger a serious recession in Germany,” the six think tanks including Ifo, DIW and RWI said in their annual spring report.

The government has unveiled an eye-watering €1.1 trillion rescue package to cushion the blow for companies and employees, even suspending a constitutional balanced-budget rule to ramp up its response.

The package includes state guarantees for loans to businesses, easier access to benefits for workers placed on reduced hours, and direct support for the hardest-hit firms.

But even with the unprecedented measures, the six institutes warned that the recession “would leave its mark” on the job market.

Germany has long enjoyed record-low unemployment of around five percent, and German workers with their relatively high wages have for years been a key driver of the country's growth via domestic consumption.

Unemployment could climb to 5.9 percent report this year, the institutes said.

The number of workers on shorter hours meanwhile is expected to hit 2.4 million, as giants like Lufthansa, Volkswagen, BMW and Puma join a slew of companies taking up a government scheme that tops up the pay of affected employees.

Looking ahead, the institutes said Germany with its bulging state coffers was “well positioned” to cope with the economic slump and should bounce back in “the medium term”.

For 2021, the institutes expect Germany to notch up growth of 5.8 percent.

The German government will unveil its official projections for the economy on April 29th.

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