Apr 24, 2020

Axios Navigate

Welcome back! If you've got tips or feedback, or just want to say hi, send me an email at joann.muller@axios.com.

🚨 "Axios on HBO" is expanding its 2020 season and moving to a new night and time! We return with can't-miss episodes airing biweekly, starting Monday, April 27 at 11pm ET/PT on all HBO platforms.

Today's Smart Brevity count: 1,681 words, a 6-minute read.

1 big thing: auto industry on ice over testing

Illustration: Aïda Amer/Axios

Unionized auto workers say General Motors, Ford and Fiat Chrysler shouldn't restart production until there is sufficient testing to show it is safe to go back to work.

Why it matters: President Trump and a handful of governors are pushing to reopen the economy, while losses mount at companies whose operations are suspended. But consumers are wary about lifting stay-at-home restrictions too soon, and if worried employees don't show up either, it will be next to impossible to get America back up and running any time soon.

What's happening: Many automakers had been targeting May 4 to begin a gradual ramp up of production under strict new health safety protocols (See item 4 below). GM and Ford had not announced a date, but were expected to launch around the same time.

  • Some of those plans started to unravel late in the week as governors in manufacturing-heavy states, including Illinois and Michigan, signaled they would extend their stay-at-home orders beyond April 30.
  • Both are part of a seven-state Midwestern regional plan to reopen businesses.

The UAW wants to see more testing before plants reopen, telling companies that early May is "too soon and too risky" for its members.

  • "At this point in time, the UAW does not believe the scientific data is conclusive that it is safe to have our members back in the workplace," said UAW President Rory Gamble in a statement Thursday.
  • "We have not done enough testing to really understand the threat our members face."

The big picture: Anthony Fauci, the nation's top infectious diseases expert, says the U.S. is "just not there yet" in terms of reaching the testing capacity needed to reopen large parts of the economy.

  • President Trump told reporters Thursday that he doesn't agree with Fauci's assessment. "I think we're doing a great job on testing," the president said.
  • The number of coronavirus tests being completed daily is not enough to relax stay-at-home orders, medical experts say.
  • A number of governors said this week that there are shortages of key testing ingredients like swabs and reagents that are preventing their states from meeting demand.

Between the lines: The UAW, while smaller and less powerful than back in its heyday, still has the clout to influence industry decisions.

  • Not so for many non-union employees; if they fail to show up for work because they're afraid of getting sick, they could be out of a job.
  • It's why the coronavirus is inspiring a new labor movement to draw attention to the health risks employees face at work during the pandemic.
  • "Union representation is not just about wages and benefits. It's about the terms of work," says Kristin Dziczek, vice president of Industry, Labor & Economics at the Center for Automotive Research.

The bottom line: It could be several more weeks — or longer — until the auto industry starts up again.

2. When losing (only) half your business is good

Illustration: Rebecca Zisser/Axios

Restarting vehicle manufacturing plants when it is safe to do so would surely be good news for the U.S. economy, but it's only half the equation for automakers.

The big picture: Until consumers are ready to buy cars again, the industry's recovery will be muted.

There are reasons to be optimistic: After plummeting in March, retail auto sales stabilized during the first two weeks of April and are now showing signs of recovery, according to data agency J.D. Power.

  • For the week ending April 19, car sales were down only 48% from J.D. Power's pre-virus forecast, after dropping 51% the prior week and 55% the week before that.
  • It's better than the 59% plunge at the end of March, or the even steeper drops seen in China and Europe as the coronavirus swept across the globe.

Some markets, especially in the South, are improving faster than others.

  • Miami sales were down 34%, and in Phoenix, sales are almost normal, down 14% for the week ending April 19.
  • Sales were down 77% and 85%, respectively, in New York and Detroit — two virus hotspots — but that's better than the week before.
  • It helps that the Department of Homeland Security last week added vehicle sales to its list of essential services, meaning you can buy a car at a showroom or online in any state.

What to watch: May will be critical. It's ordinarily a big month for carmakers, and the easing of restrictions in some markets could mean continued improvement.

Yes, but: There are some flashing yellow lights.

  • With factories closed, inventories are dwindling, especially pickup trucks, a segment that's been more resilient than others during the crisis.
  • Trucks account for a huge slice of the industry's profits, so resuming production soon is critical.
  • Used-car sales remain week, and with wholesale auctions closed, volumes fell about 73% below J.D. Power's pre-crisis forecast.
  • The sharp downturn in the used-vehicle market also spells trouble for the credit lending arms of companies like GM and Ford, which could lose billions on upside-down leases and loans.

The bottom line: The outlook for 2020 auto sales is improving. Instead of completely seizing up, new vehicle sales now look to be in the range of 12.6 million to 14.5 million units vs. a pre-virus forecast of 16.8 million, says J.D. Power.

  • My thought bubble: Car dealers are optimistic and resilient by nature. They'll take it.
3. New: The Axios app is here

Illustration: Axios

You asked for it! We're unveiling an Axios mobile app — an efficient, elegant experience I think you'll like.

Why it matters to you: 

  • One convenient place: Now you can enjoy all your Axios newsletters and stories in one easy-to-access mobile location. 
  • It looks amazing: The app's design is sophisticated, yet simple — allowing you to intuitively consume news in Axios' signature Smart Brevity™ format.
  • Experience more Axios: You can sign up for push notifications for breaking news, and get exclusive updates from me or other Axios journalists throughout the day. 
4. A glimpse of the new normal at work

GM workers collaborate as we all will some day: wearing masks. Photo: Joann Muller/Axios

Whether you work in a factory, a retail store, a restaurant or an office, you're going to have to get used to wearing a mask at work for the foreseeable future.

Why it matters: Until there's a vaccine for the coronavirus, or enough people have been exposed that it's no longer a threat, masks will be advised, and likely required, in public.

Context: I visited a former GM transmission factory Thursday that is now a hub of mask-making activity.

To be allowed inside, I had to practice all of the new health safety protocols that GM is instituting at its factories and which are likely to be similar for any workplace.

  • I sanitized my hands and then put on a mask.
  • I had my temperature taken, and answered a health questionnaire.
  • I did not sign in; instead the security guard signed me in from behind a cordoned-off visitors' desk.
  • Inside the clean room where GM is making the masks, I donned a gown and a hairnet for added precautions.

My thought bubble: It was exciting to be out of my house, and doing my job for a change, but I was anxious about touching anything, or letting people stand too close.

The whole point of wearing a mask at work, however, is to allow safe interactions with colleagues.

  • The break area, on the other hand, was a lonely-looking place: one chair at each table, all facing the same direction, placed six feet apart.
  • The orientation area had footprints painted on the floor, telling workers where to stand during meetings.
  • After a masked interview across a large conference table, a GM employee quickly sterilized the table and chair where I'd been sitting.
  • This must be the new normal, I thought.

Gerald Johnson, GM's executive vice president of global manufacturing, says people just have to get used to it.

  • "It took us decades to learn how to wear seat belts. Today nobody questions it."
5. Driving the conversation

Actress Hedy Lamarr received a 1942 patent that helped usher in self-driving car technology. Photo: Bettmann/Getty Images

Hollywood story: Chasing the leading lady who escaped the Nazis and helped build our self-driving future (Elana Scherr — Road and Track)

  • Worthy of your time: This is a delightful story about Hollywood starlet Hedy Lamarr, whose 1942 patent for frequency hopping — moving small bits of information quickly across multiple bandwidths — became the basis for communication technologies that now allow a Cadillac to drive itself.

Joint venture: Daimler, Volvo Trucks team up on hydrogen fuel cells for heavy trucks (Greg Gardner — Forbes)

  • Why it matters: The costs of new technology, plus the added uncertainty related to the coronavirus pandemic, are pushing large manufacturers to pool resources. The companies are open to other partners.

Cash poor: Billionaire Trevor Milton's Nikola Motor received $4 million from PPP coronavirus small business fund (Robert Frank — CNBC)

  • What they're saying: The hydrogen trucking company said the taxpayer money will act as a cash bridge to retain its 300 employees while a $3 billion merger with VectoIQ closes. "There's a difference between a high valuation and having cash," the company told CNBC.
  • For the record: Axios is among the 1.7 million small businesses that qualified for a PPP loan.
6. What I'm driving

2020 Toyota Camry TRD performance model. Photo: Toyota

This week I'm driving a high-performance Toyota Camry, which sounds like an oxymoron, but hear me out.

The big picture: The Camry has long been a practical, reliable choice — it's spacious, quiet and comfortable.

  • My mother drove a beige Camry, which was pretty much ubiquitous in her Florida retirement community.
  • In recent years, though, Toyota has been trying to inject some excitement across its vehicle portfolio, both in terms of styling and driving characteristics.

Toyota takes it to the next level with its TRD performance line, which stands for "Toyota Racing Development" and is inspired by Toyota's racing heritage.

  • For the first time, the Camry is getting the full TRD treatment, combining a track-tuned chassis and a 301-hp V-6 engine.
  • Hard-core enthusiasts will quibble that it's not really a performance car because the engine is not unique and, well, it's a Camry.

All I can say is it's the sportiest Camry I've ever driven.

  • Its bolder stance includes aerodynamic features like side skirts and a trunk lid spoiler.
  • And the engine is tuned to sound more aggressive.
  • I'm not a fan of the latest Camry interior, but the TRD dresses it up with accents like red stitching on the leather-wrapped steering wheel and even red seatbelts.

Toyota doesn't skimp on assisted driving features, even in models like the Camry TRD, which is meant to be driven aggressively.

  • It includes automatic braking and pedestrian detection, adaptive cruise control and lane-keeping assistance technology as standard features.
  • Other systems, including help for backing out of parking spaces, are also available.

The bottom line: The Camry TRD starts at $31,040, which is a lot of fun for a reasonable price.