Michigan business in brief: Big Three shut down over coronavirus fears
For a few hours anyway, Michigan Manufacturing Association President and CEO John Walsh felt calm Wednesday, his spirits elevated by news that Chinese factors supplying U.S. automakers are coming back online.
“This leaves us with a degree of calm and confidence,” Walsh said. “It’s a horrible situation worldwide, but anytime you can find a reason to feel good, well, that’s good.”
Hours later came the bad news: General Motors, Ford and Fiat Chrysler were temporarily closing all their U.S. factories, a move that nationwide will idle about 150,000 workers.
The United Auto Workers union has been pushing for the companies to stop operations because of fears of the coronavirus.
In Michigan, the move affects 23,000 workers from Fiat Chrysler, 21,500 at assembly and parts facilities for Ford and 16,300 for GM.
Ford closed a plant in Wayne and Fiat Chrysler stopped production at a plant in Sterling Heights on Wednesday shortly before the announcement after each found an employee that had tested positive for coronavirus.
Honda Motor Co. announced Wednesday that it is closing its North American factories for about one week starting Monday.
“Safety first,” Walsh said by mid-afternoon. “I was upbeat this morning, but you only know what you know.”
Manufacturers account for nearly 20 percent of Michigan’s total economic output.
Michigan has more than 600,000 manufacturing workers who made an average of $79,300 as of 2017, according to the national association.
Beyond autos, Michigan’s more than 11,000 manufacturing businesses make many things. Machinery, metal parts, chemicals, and food and beverage manufacturing all produce more than $5 billion in annual output in Michigan, according to the national association.
“So much of that is necessary to continue now – and it will continue,” Walsh said.
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Walsh said Michigan manufacturers are working with state government to identify manufacturers that may be able to retrofit themselves for emergency production of facemasks and other personal protection equipment.
“It’s possible, he said. “It depends how quickly they can retool.”
In other business developments:
Unemployment claims surge
Unemployment claims this week have increased 550 percent compared to normal anticipated times this year, said Erica Queely, a spokeswoman for the state Unemployment Insurance Agency.
The increase followed Gov. Gretchen Whitmer’s closure this week of bars, restaurants, health clubs and other public spaces.
The state has closed Unemployment Agency lobbies, suspended in-person registration and work search requirements and is urging online applications at Michigan.gov/UIA, or by phone at 866-500-0017 Monday through Friday from 8 a.m. to 5 p.m.
Because of the pandemic, unemployment benefits are being extended to workers who have unanticipated family responsibilities because of the closing of schools; those who must care for loved ones who become ill; who are sick, immunocompromised or quarantined and don’t have paid medical leave.
Benefits are also being extended from 20 weeks to 26, and the application eligibility period will increase from 14 to 28 days.
Credit unions and banks brace for impact
“There’s a big demand for emergency access to cash, and our credit unions will be addressing that,” said Dave Adams, the president and CEO of the Lansing-based Michigan Credit Union League. “Low-rate loans with flexible pay-back options are something credit unions are good at.”
Adams said he expects many of his 215 member credit unions to begin deferring loan payments and offering low- or zero-percent short-term loans for those experiencing financial difficulties due to the pandemic.
“In this unbelievable low-interest-rate environment, our credit unions will see unprecedented volumes of requests to refinance home loans, which will be another way people can lower their monthly expenses,” he said, noting that Michigan credit unions have $60 billion in assets.
Likewise, Huntington Bank announced Wednesday it is offering immediate financial relief to customers affected by coronavirus.
Customers and small businesses facing financial hardships related to family sickness or workplace closures can get a payment deferral on loans for up to 90 days with no credit bureau impact.
Late fees on consumer and business loan payments are deferred through the end of the month and may extend that suspension as conditions warrant. And new vehicle repossession actions are suspended temporarily.
Fifth Third Bank: Investors have survived past pandemics
Economists at Fifth Third Bank urged investors not to despair despite huge stock market drops: “The U.S. economy survived the arguably greater health challenge of the Spanish Flu pandemic of 1918 and 1919, to say nothing of the toll of wars and deep recessions… Markets are discounting mechanisms, and prices have been falling to recognize the coming economic setback. Just as they started pricing in the decline before it actually began, we eventually should expect to see markets start to price in the eventual recovery and new advances, although the answers to the question of ‘when’ and ‘from what level’ will only be known in hindsight.”
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