MICHauto and Industry Leaders Provide Testimony in Legislative Hearing on COVID-19September 2, 2020
- Carla Bailo, President and CEO, Center for Automotive Research
- Brian O’Connell, Regional Director, State Government Relations, General Motors Co.
- Glenn Stevens Jr., Executive Director, MICHauto; Vice President, Automotive and Mobility Initiatives, Detroit Regional Chamber
- John Walsh, President and CEO, Michigan Manufacturers Association
- Mark White, President and CEO, Shape Corp.
MICHauto’s Glenn Stevens Jr. kicked off the hearing with the following testimony:
Committee Chair Hall, Majority Vice Chair Nesbitt, Minority Vice Chair Guerra, distinguished Senators and Representatives of the Great Lakes State and the Joint Select Committee on the COVID-19 Pandemic, and Committee Clerk Lake – Thank you. Thank you for the opportunity to join you this morning with my colleagues and friends from Michigan’s automotive, design, engineering, and manufacturing community. Thank YOU for your service to all of us and to our State. It is greatly appreciated.
I had a friend from my hometown of Marquette who left us too soon. Representative John Kivela, of Michigan’s 109th House District, was the type of person who believed in collaboration, in unity and the power and synergy of working together. I know he is looking down wishing he were here to help and be a part of the solutions we are working on, just as you are today. He would be pleased to see this today. Rest in Peace John.
- November 2019. China witnessed its first case of COVID-19.
- December 2019. Europe witnessed its first case of COVID-19.
- March 10th, 2020. Michigan saw its first reported case of COVID-19.
- March 18th, 2020. The first Michigander lost their life to coronavirus.
As of September 1st, 6,769 Michiganders have lost their lives to COVID-19. Among them were your colleagues and our leaders, State Representative Isaac Robinson and former State Representative Morris Hood the 3rd. Also gone too soon. Rest in peace to those gentlemen as well. Too many gone, and unfortunately, we are not through to the other side of this yet.
We would like to submit that because of our healthcare heroes, leaders in so many walks of life, and ordinary citizens and volunteers, this number would undoubtedly be higher. And because of our automotive, manufacturing, and mobility industries and their actions, deaths have been prevented, and recovery has been enabled. Just as Michigan mobilized its Arsenal of Democracy in 1940 to provide critical supplies to our allies in their fight against Nazi Germany and the Axis Powers, 80 years later Michigan mobilized again in a fight against an unseen and unknown enemy. Our Arsenal of Health took over with a century of innovation, engineering, and manufacturing experience, skills, and grit and set it into action again to provide supplies and technologies to a frontline right here in our hometowns.
Today we bring together a representation of the people and companies who stood up, acted, worked countless hours, and are still at it to provide materials, supplies, and equipment to our frontline healthcare heroes. Our organization, MICHauto, serves as the voice and convening body for Michigan’s automotive and mobility community. Our home is at the Detroit Regional Chamber. We are part of the economic development, education, attainment, workforce development, and policy initiatives that are helping to drive a diverse and inclusive talent pipeline for growth and opportunity for our industry citizens. MICHauto also serves as the Statewide association that consists of a “big tent” for our industry stakeholders. We work with and for the OEMS (Original Equipment Manufacturers), suppliers, technology companies, professional service providers, start-ups, economic development agencies, universities, and community colleges. We are dedicated to promoting, growing, and retaining Michigan’s signature automotive and mobility industry as the state’s only cluster association.
Before my colleagues address you, I would like to take a few minutes to set the stage and provide you a summary of our industry’s unparalleled previous 6 months which have brought us here today.
March of this year was not the first sign of the battle for our automotive industry in this pandemic. Michigan is home to many global suppliers and a globally connected supply chain that stretches to every corner of the planet. Because of this, companies experienced the shutdown of Wuhan, of Italy and subsequently many other parts of the industry landscape. These companies had to deal with the pandemic early on other continents. These global experiences helped us at home, here in Michigan, when the virus was at our front door.
We have experienced several phases over the past few months. It began in March with the industry shutting down. Even in the tumultuous downturn that commenced in the Great Recession of 2008, we did not see a complete shutdown. Determination of essential production was critical, and companies had to navigate 50 different state governing policies, the closure of our borders, and the myriad of international proclamations and orders. All of this while some states “stayed open,” auto dealerships were unrestricted, and demand continued.
As mentioned, the industry immediately pivoted to the design and manufacturing of PPE, Personal Protective Equipment, and innovations to support the healthcare workers. Across Michigan, we saw time and time again companies and individuals making masks, shields, bed coverings, and high-tech equipment such as ventilators. The industry worked 24/7 and was “on call” to support the doctors, nurses, technicians, and first responders who were on duty and literally fighting the battle.
As many of you know, this is a very capital-intensive industry with perhaps the most complex supply chain on the planet. Therefore, it was essential that financial matters be addressed simultaneously. Companies sprang into action to utilize lines of credit, minimize non-essential expenses, and prepare for what was a very uncertain future. Tools such as the CARES act and financial liquidity instruments have been utilized and deployed wherever possible. Remarkably the industry has not seen a significant surge of bankruptcies or failures. As someone who has been in this industry and through the Great Recession, I can comfortably say that this is due in large part to our industry’s leadership and actions. Companies operate with discipline, focus, and an eye to the unseen while continuing to execute. Rather than be a victim of an inflection point, the automotive industry had been adjusting to a slow down and anticipating some leaner years. However, this pandemic was not something that could have been foreseen.
While companies looked after the well-being of their employees, their balance sheets and continued production for essential industry, preparations were also being made immediately for a restart. Companies such as Lear, Magna, Adient, Ford, GM, and others created Safety Playbooks. They used their global experiences and resources to assemble incredibly intricate safety protocols. They detailed every aspect of testing, safety, training, and response imaginable, and the protective equipment that would be needed. They were done in conjunction with the UAW, with other associations and groups, and as individual companies. One of the most significant and powerful developments which came out of the development of these playbooks is that they shared them in an open source manner with smaller companies and other industries. The automotive community set the bar high for keeping companies open and protecting their people.
As our numbers abated and the economy began to turn again, we saw that the OEMs would restart production in May. MICHauto, along with associations like OESA, the Original Equipment Suppliers Association, advocated for an earlier start for the supplier industry. Over 70% of the vehicle components utilized in an assembly plant come from the suppliers. On May 5th we submitted a letter to Governor Whitmer advocating for a minimum of 5 days for the suppliers to start operations prior to the OEMs. We are pleased that this occurred.
As we sit here today, the safety protocols are working, operations are in full swing and the industry is operating at a very robust level. On July 16th as cases did see a surge in our State, MICHauto submitted another letter urging Governor Whitmer not to close manufacturing again, but rather to let the safety protocols that were implemented continue to do their job. There have been no outbreaks linked to our plants. This industry remains committed to keeping businesses open and protecting employees.
Another step we have taken at MICHauto and the Chamber was to ask companies to take the “Mask Up Michigan” pledge and to adopt our “Work Smart. Play Smart” campaign and messaging. The industry has witnessed that while the Safety Playbooks are working, it is important that employees remain vigilant in all aspects of their lives. Many companies such as Lear and Continental Structural Plastics, a Teijin Company, have utilized the SMART acronym:
- Socialize in small groups
- Mask up to keep manufacturing moving
- Always opt for outdoor dining and activities
- Remember to be smarter than the virus and to be vigilant of the symptoms
- Take this seriously. It will be temporary, and we WILL get through this.
We will do what it takes to continue to keep our companies open, people employed, and our communities as vibrant as possible in this trying time. Michigan is home to 22 OEMs, 96 of the top global suppliers to the North American market, and over 2,200 testing, design, engineering, and manufacturing facilities. The auto industry is in some way directly or indirectly present in every community of our State. It has been our lifeblood and it will be our future as we continue to build the vehicles in demand today while imagining and engineering the next generation mobility solutions that our societies and planet demand. Transportation is changing, and Michigan is at the forefront of this revolution. We have proven over the decades how innovative and resilient we are, and we have shown it again these past six months. We have proven that we can make what is needed for the market in times of emergency. This industry has an annual economic contribution of $225 Billion to our State. The opportunity to capitalize on the growing mobility sector and to continue to use the auto industry as a platform for diversification through Industry 4.0 technologies and mobility solutions will be critical for our State. This starts with education, infrastructure eliminating the digital divide for all citizens, and to growing our population in this State.
There are challenges that the pandemic will continue to throw at us, and you will hear about some of them today. There are also so many success stories of people and companies that have stepped up that they are literally impossible to track. There are also the challenges for companies to implement the USMCA, deal with liquidity issues, and adapt to the changing market forces.
Since March 23rd, every Monday at 3 p.m. we have convened a call. On this call with Jason Puscas, who heads up Advocacy for MICHauto (thank you for your efforts Jason) are representatives from MICHauto, Michigan Manufacturers Association, Original Equipment Suppliers Association, Motor Equipment Manufacturers Association, Center for Automotive Research, The Right Place in Grand Rapids, Business Leaders for Michigan, the Detroit Regional Partnership, the Michigan Economic Development Corporation, Labor and Economic Opportunity Department, federal legislators like Congresswomen Dingell and Stevens and the office of Sen. Gary Peters as well as periodically representatives of the Michigan Legislative Auto Caucus. Most importantly we also have members of the Michigan Legislative Auto Caucus involved with these calls and in daily contact with the industry. Sen. Schmidt, Sen.McMorrow, Rep.Lilly, and Rep.Tate the Co-chairs of the Caucus have been engaged and a tremendous asset for all of us. In March and April, this group worked to coordinate PPE manufacturing and supply, we moved into safety protocol and recovery. We are now focused on navigating the current “new normal” while looking toward our future.
Our auto community has set aside everything with the north star goal of protecting and growing our industry, ensuring that it operates to help save lives now and into the future, and designing, engineering, and building the transportation solutions the world needs. We are an industry that solves global issues not contributes to them.
Collaboration, unity, and the power of working together has brought the synergy that has carried us these past few months and it is precisely what WE will need to focus on as we look to the future.
Thank you again for your service, for your time and for listening today.
John Walsh, President and CEO, Michigan Manufacturers Association
Walsh’s testimony on behalf of Michigan-based manufacturers centered on the importance and impact of the supply chain, especially in the throws of the COVID-19 pandemic. He emphasized its fragility and complexity – how the slightest disruption can impact business globally. To that end, Walsh discussed the concept of regionalizing supply chains as a protective measure to ensure great flexibility and nimbler adaptivity should future crises arise. His testimony also addressed liability protections to support health and safety efforts being taken by manufacturers.
Brian O’Connell, Regional Director, State Government Relations, General Motors Co.
O’Connell highlighted General Motors’ leading safety protocols and strategies for maintaining and recovering its business. Like most, General Motors was hit with significant impacts to employment and revenue as a result of COVID-19 shutdowns and lingering effects as restarts are underway. In addition to General Motors’ priority to keep employees safe, O’Connell showcased the company’s efforts to serve the community and support frontline workers at the helm of containing COVID-19. Despite the significant financial damage the pandemic inflicted on its business, General Motors quickly shifted operations to produce essential PPE and medical equipment from the onset of the crisis in the U.S. It converted a plant to make ventilators in less than 30 days, having produced more than 30,000 as of Aug. 31. All of the items they produced were donated as were the 22,000 hours of services to make this possible.
Mark White, President and CEO, Shape Corp.
White’s testimony focused on Shape Corp.’s commitment to its people, navigating the crisis by first protecting the health and safety of team members, their families, and communities and supporting customers before shifting to the business’ recovery. He acknowledged the labor issues the pandemic is causing, particularly with employment challenges with recruiting, absenteeism, and turnover due to workers’ changing personal and financial circumstances. White’s team has made tremendous investments into the team to ensure expert health and safety measures for employees and facilities as well as increased wages and flexibility for workers, calling on legislators to consider the financial toll these necessary adjustments are taking on businesses to establish long-term solutions.
“We need progressive workforce development programs that provide training and upskilling.”
Carla Bailo, President and CEO, Center for Automotive Research
Bailo provided key metrics demonstrating COVID-19’s ongoing impact on the automotive industry in terms of vehicle sales, employment, vehicle miles traveled, and more. She acknowledged that the industry’s recovery is underway – a two-year process predicated on continued progress – which requires three key factors: a healthy workforce, healthy supply chain, and healthy demand. The automotive industry is resilient and has proven so through the collaboration and adaptation through this crisis, which poses both opportunities and challenges as the industry prepares for future innovation and evolution in the new normal created by the pandemic. Paramount to that is leadership in updating supply chains and facilities to accommodate new technology and putting solutions to social inequities at the forefront as new transit systems are created.
“Crisis breed opportunity.”