Companies temporarily shut swaths of manufacturing capacity across Europe as they tried to protect factories and workers from the spread of the new coronavirus and comply with an array of government measures to slow the disease’s spread.
Volkswagen AG , the world’s biggest car maker by sales, said Tuesday it was preparing to shut down most of its European plants. It had previously said it was only shuttering sites in Italy, the country hardest hit by the virus outside of China, and Spain.
“Most of the other German and European plants are now preparing to interrupt production, probably for two weeks,” Volkswagen Chief Executive Herbert Diess said.
Airbus SE, the world’s biggest plane maker, said it was temporarily halting production at its plants in France and Spain. It said the shutdowns would last four days to enable it to enact new sanitation and hygiene measures and retool workspaces to allow more distance between workers.
On Monday, a wave of big manufacturers started shutting down plants. Fiat Chrysler Automobiles NV has shut most of its factories in Europe for several weeks. Peugeot maker PSA Group and Renault SA also said they were closing plants.
U.S. factories have mostly remained opened. A Volkswagen plant in Tennessee closed for a day to allow workers to make arrangements amid school closings.
As companies closed plants, governments started rolling out financial aid for companies and workers. Some countries are enforcing strict lockdowns, closing all but essential retail businesses and restricting movement.
France is promising €45 billion euros ($50 billion) in immediate aid for businesses and employees impacted by the epidemic. French Finance Minister Bruno Le Maire said Tuesday that his provisional predictions showed the response to the pandemic would slash 1% from France’s gross domestic product this year. The government plans to present a revised budget law for 2020 later Tuesday.
“There is a war against the virus. There is also an economic and financial war. This economic war will be long-lasting and violent,” Mr. Le Maire said.
The French government’s plan for businesses will include an expanded partial-unemployment scheme in which the state pays the salaries of employees who aren’t needed during the crisis.
Mr. Le Maire reiterated Tuesday that France will guarantee €300 billion in bank loans for smaller firms.
“We won’t have one small- or medium-size business that doesn’t have liquidity that it needs,” he said.
Volkswagen warned that it may be driving blind for months as the pandemic impairs long-term visibility in its most important markets and businesses.
“The spread of coronavirus is currently impacting the global economy. It is uncertain how severely or for how long this will also affect the Volkswagen Group,” Chief Financial Officer Frank Witter said.
Mr. Witter spoke as the company released details of its annual earnings, a time when corporations usually shift from taking stock of past performance to assessing their ability to master the challenges ahead.
However, this earnings season is different, as companies like Volkswagen can’t rely on the usual tools and metrics to navigate the global economy. The ground is shifting too fast and, as a result, their projections have often had a short shelf life.
In February, Volkswagen predicted that sales in 2020 would remain stable and its pretax profit margins would be between 6.5% to 7.5%. Now, that estimate seems uncertain.
