The auto industry returns to work this week. Automakers in the U.S. are opening at partial capacity, which means about half the workforce will be back at work. That comes out to around 130,000 people back on the job.
Thing is, to make an American car, you need loads of components from Mexico, which got hit by the pandemic well after the U.S. did.
Still, the pressure is on for Mexico to join the North American supply chain ASAP.
A typical part in a U.S.-made car has crossed the border into Canada or Mexico eight times before final assembly.
U.S. automakers depend so much on Mexican partners that they’ve waged a pressure campaign for them to restart, according to Duncan Wood, director of the Mexico Institute at the Wilson Center think tank.
“They have spoken to the Mexican government. They have spoken to business associations in Mexico,” Wood said. “We’ve also seen through the State Department stronger and stronger messages, saying that Mexico needs to think about the ways it thinks about cooperating with North American partners.”
It seemed to work. Last week, Mexico’s government declared auto plants essential, letting them restart this week. But the pandemic risk there may be high, said supply-chain consultant Jeoff Burris at Advanced Purchasing Dynamics.
“People are literally sitting within 2 to 3 feet of one another because you’re passing an assembly product down the line,” Burris said.
And in Mexico, the virus hit later than in the U.S. So cases are still going up.
“We are behind in terms of getting our highest number of cases. At least a month behind, compared to New York City,” said Fernando Alarid-Escudero, assistant professor at Mexico’s Center for Research and Teaching in Economics.
So for all the risk, can the North American auto supply chain put itself back together safely and quickly?
There’s not much margin for error, as U.S. factories keep limited inventory. Economist Tom Fullerton watches cross-border supply chains at the University of Texas, El Paso.
“They probably have enough inventory of spare parts to get them through the next 12 days. Any type of disruption to the supply chain is going to be short-lived at best,” Fullerton said.
He’s an optimist. Others aren’t so sure. In Alabama, Mercedes has halted operations because it can’t get the parts it needs from Mexico.
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The CARES Act, passed by Congress and signed by President Donald Trump in March, authorized extra unemployment payments, increasing the amount of money, and broadening who qualifies. The increased unemployment benefits have an expiration date — an extra $600 per week the act authorized ends on July 31.
Which states are reopening?
Many states have started to relax the restrictions put in place in order to slow the spread of COVID-19. Although social-distancing measures still hold virtually everywhere in the country, more than half of states have started to phase out stay-at-home orders and phase in business reopenings. Others, like New York, are on slower timelines.
Is it worth applying for a job right now?
It never hurts to look, but as unemployment reaches levels last seen during the Great Depression and most available jobs are in places that carry risks like the supermarket or warehouses, it isn’t a bad idea to sit tight either, if you can.
You can find answers to more questions here.
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