Shanghai plants struggle to reboot as virus lockdowns drag on

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SHANGHAI  Companies reopening factories in locked-down Shanghai are booking hotel rooms to house workers and turning vacant workshops into on-site isolation facilities as authorities urge them to resume work while complying with tough COVID-19 curbs.

Hundreds of companies including multinationals Tesla Inc. and 3M have reopened factories in the Chinese economic hub under local guidelines requiring them to isolate workers inside a “closed-loop”.

But executives say they are not yet running at full capacity and describe the process as far from straightforward, given the logistical hassles of compliance, including a lack of space, and having many workers remain stuck at home in locked-down housing compounds.

Without on-site living space, U.S.-based 3M has been booking hotels for factory workers, complying with closed-loop rules by transporting them between the plant and lodging, said its China president, Ding Hongyu.

But finding rooms is difficult as many Shanghai hotels are already occupied by medical workers and others managing the city’s massive effort to fight COVID.

“This is a rather big challenge,” Ding told reporters on Thursday. “There is currently limited supply of suitable hotels or accommodation that fulfil our requirements.”

Some automakers, including General Motors, have asked workers to sleep on factory floors, sources told Reuters.

Fitch Ratings warned on Friday that China’s auto industry faces severe disruptions and “substantial risks” in the second quarter because of COVID control measures that have idled plants and showrooms, and sidelined workers.

The credit rating agency said it expects near-term challenges to remain, even as production resumes, and for the impact of COVID-19 to last longer for China’s auto retail sector than manufacturing.
 

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