Shanghai’s auto factories begin reopening

shanghais auto factories begin reopening
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SHANGHAI – Automakers including Tesla Inc. were poised Monday to reopen their Shanghai plants as China’s most populous city speeds up efforts to get back to normal after a nearly three-week Covid shutdown.

Still, most workers will have to continue living onsite, and there was no immediate word how factories will deal with disrupted supply lines and closures ordered by authorities in other cities. Port and trucking problems remained a concerned as well.

The city’s shutdown and China’s measures to control the pandemic elsewhere have hurt the economy and rattled global supply chains. Shanghai’s 25 million people have struggled with income losses, lack of steady food supplies, separation of families and poor conditions in quarantine centers.

Beijing said last week it had drawn up a “white list” of 666 firms prioritized to reopen or keep Shanghai operations going, including Tesla, Volkswagen and its Chinese partner SAIC Motor, as well as semiconductor and medical firms, according to a copy of the list seen by Reuters.

To prepare for the restart, Tesla has recalled workers to its Shanghai plant where they will need to live on site, in line with China’s “closed loop management” process, two sources said.

The EV producer will provide each worker with a sleeping bag and mattress, a memo sent to employees and viewed by Bloomberg shows. Given there isn’t any purpose-built dorm, people will be required to sleep on the floor in a designated area and there will be other spaces allocated for showering, entertainment (both yet-to-be completed) and catering, the memo shows.

All employees will have to take a nucleic acid test daily for the first three days, have their temperature checked twice a day and wash their hands four times a day, twice in the morning and twice again in the afternoon, the memo shows. Workers will be provided with three meals and be given an allowance of about 400 yuan ($63) a day, although the actual amount will depend on a person’s position and level, one of the people said.

Only staff residing in the lowest risk residential compounds and those who have completed a two-shot vaccination regime will be allowed to re-enter, joining the some 400 staff already on site due to pandemic prevention and emergency measures, according to the memo.

The last closed-loop workers entered the factory just after midnight and are expected to work in the system through May 1, although that could change in accordance with the city’s pandemic prevention policies, the memo said.

Prior to the pandemic-inducted halt on March 28, Tesla workers in Shanghai were working three shifts covering 24 hours, seven days a week. Factory staff would work four days on and then have two days off. Now they’re being asked to work 12 hours a day, six days straight with a day off, people familiar with the matter said.

The company’s Shanghai plant was producing about 2,100 cars a day, churning out 182,174 vehicles in the first quarter. Ramping production back up from such a long shutdown won’t be an instant process, however.

Tesla only has inventory for a bit more than two weeks based on its new closed-loop schedule, another person familiar with the matter said, and logistics are a major problem for many other parts.

SAIC Motor said it would start conducting stress tests on Monday on its own production resumption plans, while VW said it was evaluating the feasibility of resuming production at its joint venture with SAIC.

The city aims to stop COVID-19 from spreading outside quarantined areas by Wednesday, Reuters cited sources as saying on Sunday, an ambitious target that would allow further easing of its lockdown.

It is stepping up testing and the transfer of positive cases and their close contacts to isolation centers to meet that goal.

Reuters and Bloomberg contributed to this report.


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