Doug’s latest message to our team…
April 7, 2020
In this week’s update, I’d like to share some positive news from the APAC region. As I mentioned last week, there are encouraging signs of recovery in China, where all 79 of our Adient plants and all 88 of our customers’ locations have reopened. I asked James Huang for an overview of the progress there — here are a few of his observations:
• The manufacturing industry’s reopen rate is >99% (excluding the former virus epicenter of Hubei); in Hubei province, ~83% of manufacturing facilities have reopened, with 2/3 of employees returning to work
• For the service industry, which includes supermarkets, retail and entertainment, 76% of businesses have reopened
• The reopen rate for restaurants is 80+%; however, their cash receipts have only
returned to 38% of pre-coronavirus levels
• By March 26 (latest available), the auto dealership reopen rate was ~95% and traffic to dealers had returned to 62%
Perhaps the most significant sign of progress for me was when James said last week that he was at a restaurant enjoying dinner with friends. His response was so unexpected and refreshing it made me realize that we will all return to a more normal state eventually. Elsewhere, conditions have not changed. Operations in the Americas and EMEA regions remain shut down as we await a green light from local governments to resume operations. In the Americas, almost every Adient plant is currently closed in the U.S., Mexico and South
America. Plans to reopen are extremely fluid and linked to our customers’ frequently evolving production plans. Many have said they would restart production in April, but we anticipate these dates will be delayed.
In EMEA, our first plant reopened yesterday, April 6. The Zilina, Slovakia, JIT plant restarted production for Kia after a two-week shutdown. Thank you to the team there who worked hard to prepare for the smooth start of limited production on two shifts. Plant HR Manager Petra Zelnikova said employees are following important plant safety and hygiene protocols and have even made their face masks new “fashion accessories.”
Both the Americas and EMEA leadership teams continue to monitor operations, employee health and safety and other issues as well as assess supplier readiness and define restart procedures to be executed before our customers start production.
All regions continue to use their expertise to support local communities and our customers through medical manufacturing initiatives such as the design and production of face protection, hospital bed mattresses and 3D printed parts for face shields. We continue to review requests for other production assistance to help in the fight of the virus. In addition, we’re pleased that Ron Hall, president and CEO of our Bridgewater Interiors joint venture, has been selected as a member of the Michigan Economic Recovery Council. This council –
which includes the leaders of many of our customers — will develop recommendations for Michigan Gov. Gretchen Whitmer that will enable the state to return, as safely and quickly as is feasible, to full economic activity.
Financially, it remains important to continue our focus on increasing liquidity. Last week, we announced additional measures to do this that included pay reductions for employees in all regions, including my direct reports, myself and the Adient Board of Directors. Thank you for your support and understanding of these actions to help ensure the long-term health of the
business.
As always, our thoughts are with our Adient colleagues who continue to suffer from COVID-19 or have family members who have been affected. And for those of you who are observing holidays this weekend, my best wishes for an enjoyable holiday despite the very challenging circumstances this year.
Doug Del Grosso
President and CEO