A resurgence of a Covid-19 outbreak in China in March led to a lockdown in the country’s largest city, Shanghai, disrupting work at tech and electric vehicle factories and factories in other industries, causing major supply chain, logistics and production issues.
On March 28, Tesla closed its Shanghai Gigafactory, but was allowed to reopen its factory on April 19. Volkswagen closed its Shanghai-area plant on April 1, but General Motors decided not to close its plant and was allowed to remain open under so-called “closed-loop” operations.
Closed-loop measures require employees to live, work and sleep in the factory while it continues to operate, but they are not allowed to leave the factory to ensure they do not transmit the Covid virus -19 to the community outside the factory or do not bring into the factory from outside during lockdown.
Closed-loop measurements keep the plant open
Taiwan-based Quanta Computer, which assembles MacBooks and other products for Apple in Shanghai, adopted the closed-loop system in April for its employees to allow the company to remain open during the region’s lockdown.
China’s Covid-19 lockdown, which began in March, finally reached a boiling point with frustrated tech workers at Quanta’s factory in Shanghai, Bloomberg reported on May 6. A worker said employees were worried about a further tightening of measures due to positive Covid cases inside the factory campus, according to the report.
Quanta did not comment on the riot, Bloomberg said, but a factory worker said the Chinese government played a central role in managing the factory’s operations. On the evening of May 5, Quanta workers fought with factory guards and broke through isolation barriers after being locked up at the factory for several weeks.
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Tensions at the factory in Shanghai’s Songjiang district sparked the dispute after workers tried to return to dormitories after their shift, according to Taiwanese news outlet UDN, Bloomberg reported. More than 100 employees jumped over a barrier and drove past the guards, ignoring their warnings. Employees had grown tired and frustrated with the factory’s controlled environment, one worker said.
The factory resumed normal operations on the morning of May 6, according to the report.
The Shanghai shutdowns led to protests and complaints that culminated in the uprising at the Quanta plant. The implementation of closed-loop measures had also led to the restarting of production at more than 70% of Shanghai’s industrial manufacturing facilities. Officials said 90% of the top 660 industrial companies have resumed production, according to Bloomberg.
Quanta generates more than 50% of its revenue from its partnership with Apple, according to the report. The company also does business with Hewlett Packard Inc. (HPQ) – Get the HP Inc.Dell Technologies (Dell) – Get Dell Technologies Inc Class C Reportand Microsoft (MSFT) – Get the Microsoft Corporation report.
Other Apple factories closed
On March 14, Foxconn Technology Group closed its factories in Shenzhen, southern China, near Hong Kong, after city officials implemented a Covid-19 lockdown. Foxconn also announced on April 15 a Covid-19 lockdown in the Zhengzhou Airport Economic Zone where Apple’s largest iPhone factory is located. The lockdown has led the company to require its employees to undergo mandatory Covid tests.
Covid-19 lockdowns in China could result in lost production of 6-10 million iPhone units, 9to5Mac analysts say. Other Apple products affected by the blockages include the MacBook Pro and iPad Air.