Auto supplier Magna preparing for North America return to work May 4: exec

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By Ben Klayman

DETROIT (Reuters) - Canadian auto supplier Magna International Inc (TO:MG) is planning for a return to production in North America on May 4, with a subsequent gradual increase in output as the industry recovers from the shutdown caused by the coronavirus pandemic, a top executive said on Wednesday.

Most U.S. states have stay-at-home orders in place through the end of April, but many automakers and suppliers hope evidence of an easing in the COVID-19 infection rate will lead to a re-opening of factories. President Donald Trump has expressed a desire to get Americans back to work soon.

"As we stand today, we have everything in place as if the plants are coming back on May 4," Magna President Swamy Kotagiri said in a telephone interview.

The auto industry has already reopened in China, where Magna has some plants back at 80% capacity, and is just now restarting operations in Europe. In the United States, General Motors Co (N:GM), Ford Motor Co (N:F) and other companies are waiting for the go-ahead from various governors but are aiming for an early May restart.

Kotagiri said there is "no written play book" for the pandemic and understands production could be further delayed, but he is ready if that happens. What would worry him more would be restarting and then having to stop again.

"The most important thing is, How can we as an industry coordinate and minimize the start-stops?" he said.

"If someone comes and says, 'It's not May 4, it's May 10.' That's OK. It's easy to deal with," said Kotagiri, who was promoted to president in January. "But if somebody comes and says to start on the 4th and we stop again on the 12th, that's a bigger problem."

Magna, which makes parts such as body structures, chassis and powertrain for customers including Ford and Volkswagen AG (DE:VOWG_p), has about 70 employees globally recovering from COVID-19 and has seen three in North America die from the virus.

Last month, Magna withdrew its financial outlook, citing the pandemic, but said its liquidity was strong. After increasing a revolving credit facility on Tuesday, Magna has $1 billion in cash and $3.7 billion in available credit lines.

As for the restart, Magna is planning heavily for it, including drawing up an almost 60-page "Smart Start Playbook" to help with the transition, talking about best practices, and details like disinfecting guidelines, the use of personal protective equipment like masks and face shields, as well as treating and tracing infected employees.