The three largest Czech automakers are closing or significantly reducing their domestic production due to the corinavirus. Škoda Auto, in Mladá Boleslav, will stop for two weeks starting March 18. Toyota Peugeot Citroën Automobile (TPCA), in Kolin, will stop production March 25, and Hyundai Motor Manufacturing Czech (HMMC), based in Nošovice, lacks parts.
“On Wednesday, March 18, 2020, at 22:00, Škoda Auto will close its Czech plants in Mladá Boleslav, Kvasiny and Vrchlabí for approximately two weeks. We will work closely with our suppliers to ensure a smooth stop to production,” Škoda said in a satement.
Škoda is a subsidiary of German carmaker Volkswagen. “It is Volkswagen’s decision, and we take note of it. When such a factory closes, it has an impact on the entire chain,” the Prime Minister Andrej Babiš (ANO) said at a press briefing, adding that the automaker was a key part of the economy.
Škoda is the largest private employer in the Czech Republic, accounting for some 5% of national GDP.
The unions at Škoda asked for employees to be quarantined for 14 days after employee showed signs of coronavirus infection. Babiš on March 16 said he did not agree with shutting down production, as the factory in Mladá Boleslav is key to the Czech economy.
From March 18 to March 29 all employees will receive 70% of their average earnings, and from March 30 to April 5 they will get 75% of average earnings.
The infected auto worker is suspected to have come in contact with the virus on a vacation trip to Austria. A colleague from the same department who traveled with him is now being watched by doctors.
“Both of them have been out of the home quarantine since March 12. The case in infected person has been mild, according to Škoda spokesman Tomáš Kotera.
Deloitte chief economist David Marek said the closure would have a significant impact on the economy. Some firms in north and central Bohemia could go out of business. The full impact depends on the response of the government in supporting firms.
Trucks with car parts for Hyundai Motor Manufacturing Czech (HMMC)’s Nošovice plant are stuck at the border. Hyundai Motor Manufacturing Czech (HMMC) therefore had to interrupt its morning shift and cancel at least an afternoon shift on March 17.
The company plans to restart production March 18, however, unions have asked management to suspend production for 14 days so workers can quarantine.
TPCA is scheduled to stop production March 25 until April 17. About 2,500 people work at TPCA and it is the largest employer in the Kolín region, as well as a significant exporter.
Volkswagen Group before the virus warned that this year would be very difficult due to deterioration in sales and increased uncertainty over parts supply. Conversely, some Volkswagen Group plants in China have resumed operations.