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Mexican State Orders Audi, Volkswagen To Keep Mexican Factories Closed

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Mexican State Orders Audi, Volkswagen To Keep Mexican Factories Closed

Coronavirus concerns have prompted the Mexican state of Puebla to order VOLKSWAGEN AG/ADR (OTC: VWAPY) and its luxury brand unit Audi AG (OTC: AUDVF) to keep their plants closed for the time being.

Volkswagen AG had previously said it was ready to resume operations in Puebla, Mexico, on Monday.

Puebla Gov. Miguel Barbosa tweeted that he had signed a decree on Friday stating that conditions for reopening the automotive and construction sectors were not yet favorable.

"Today I have signed a decree determining that there are no conditions for the return of the activities of the automotive and construction industries in order to maintain confinement and measures to prevent further contagion from Covid-19," Barbosa tweeted.

Barbosa added that he would not restart Puebla's economy at the expense of public safety.

Around 45,000 auto workers in Puebla were expected to go back to work Monday, including 15,000 at the Volkswagen plant, 7,000 at Audi and another 15,000 who work for direct suppliers, according to the Independent Union of Volkswagen Workers (SITIAVW) in Puebla.

According to VW's Mexico website, the Puebla plant is the largest automobile production facility in the country. Last year, around 443,435 cars were made at Volkswagen's Puebla plant, which produces the Jetta, Golf 7, Tiguan Long Version, as well as engines and components.

The Audi plant in Puebla, which produces the Q5 compact SUV, made 156,995 vehicles in 2019.

Puebla is about 75 miles southeast of Mexico City and 768 miles from the U.S.-Mexico border at Laredo, Texas.

It's not clear what the continued shuttering means for VW's plant in Chattanooga, Tennessee, which relies on suppliers from VW's Puebla factories.

"We're working closely with suppliers to ensure we have sufficient parts available for production," VW-Chattanooga spokeswoman Amanda Plecas said in an email to FreightWaves.

Volkswagen's Chattanooga plant recently reported 12 positive coronavirus tests among its employees, contractors and suppliers since resuming production on May 17.

"The most recent case was last in the plant on May 28," Plecas said.

Plecas said when a case is confirmed, CDC protocols are followed, and all general areas that may have been exposed to the individual receive additional cleaning and disinfecting.

"Contact-tracing is conducted, and those meeting close-contact parameters are tested. All individuals with positive test results are placed on medical leave in quarantine for the recommended 14 days," Plecas said.

Per protocol, badge access to the VW Chattanooga plant is deactivated and the individuals cannot return to the plant until given medical clearance.

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