Ford CEO Admits to High Absenteeism Rates Among Factory Workers
"If a fifth of the workforce doesn't show up, you know something's up in a production facility where everyone has their own job," said Farley. "That's a real challenge."
Automakers like Ford, General Motors, and Stellantis, which produce Dodge, Jeep, and Chrysler vehicles, agreed in early August to reinstate mask mandates in their plants. Farley said the rule contributes to absentee issues.
"Summer vacations become more attractive economically," he said. "People say, 'I don't want to wear a mask today.' There are all sorts of excuses."
Automakers not involved in the Union Auto Workers agreement, such as Stellantis and Toyota, which now also require masks in their U.S. plants, will not disclose absentee rates in their factories, according to their spokespeople.
Ford spokeswoman Kelli Felker later confirmed that the company has hired temporary workers to fill gaps in production lines when regular workers are unavailable.
All three automakers have a pool of temporary workers ready to take over vacated positions by regular employees.
Kristin Dziczek, a Center for Automotive Research analyst, was not surprised by the temporary 20% increase in absenteeism due to the surge in COVID-19 cases, summer holidays, and other reasons people might want a break. She said the issue is severe enough to disrupt production and is exacerbated by chip shortages and other supply chain problems. However, it brings additional challenges.
"You have trouble finding enough temporary and general labor," she said.
Farley said Ford does not require vaccinations, although many executives, especially those who travel internationally, and their support staff will do so. Vaccine mandates are not part of Ford's contract with the United Auto Workers, but Farley said the union is "just as proactive" when it comes to focusing on the virus.
"Our stance is that all members should be strongly encouraged to get vaccinated and to understand the exceptions related to health and religious issues," said UAW spokesperson Brian Rothenberg in an email.
Farley said that Ford's factory production is also heavily impacted by absenteeism by workers, but more so by the global chip shortage affecting the entire industry. Without critical computer chips, automakers are struggling to build cars and trucks.
"I'd say we've improved in the third quarter, but it hit us hardest," said Farley. "Ford lost over 50% of production in the second quarter, and many other brands lost 20%."
Jeff Schuster, leader of global automotive forecasting at LMC Automotive, said Farley's projection is generally correct when compared to second-quarter 2021 production against expectations. However, more than 20% of production for most auto manufacturers fell short of expectations in comparison.
Ford sales decreased by nearly a third in July, the first month of the third quarter, compared to July 2020.
Farley said the company is taking steps to prevent future issues by collaborating with suppliers and even their suppliers' suppliers to set up early warning systems. If a supplier has issues with its subcontractors, Ford can react faster to prevent larger problems.
"The challenge is getting individual suppliers to face their challenges," said Dziczek.
"Nobody wants anyone else in their business," she said.
Dziczek said a supply chain that would normally be difficult to manage is now a nightmare due to the labor shortage combined with the scarcity of goods like computer chips, steel, and even storage containers used to ship parts to factories.
"It's amazing we can build cars at all," she said.
Additional Insights
- Supply Chain Challenges: The absence of key components due to the chip shortage and other supply chain issues can contribute to reduced production capacity and increased absenteeism since automakers may struggle to meet tight production schedules.
- Workforce Retention and Development: Offering competitive compensation, benefits, and resources for employee growth and development can help improve workforce stability, boost morale, and reduce absenteeism.
- Regulatory and Quality Risks: Behavioral flexibility and regular audits can help companies manage regulatory and quality risks, minimizing disruptions and maintaining a stable work environment.
- Price Pressures and Cost Reduction Initiatives: Effective pricing strategies and cost management can help mitigate the impact of downward pricing pressures, ultimately contributing to a more stable workforce.
While these insights do not directly address absenteeism rates, they can aid automakers in better managing their workforce and supply chain challenges, ultimately reducing absenteeism and improving overall productivity.
