From iPhone maker to VW, China factories enter bubbles over Covid outbreak

Volkswagen and Foxconn are keeping their workers on-site in their factories in Chengdu after the Chinese metropolis locked down its 21 million residents to contain a Covid-19 outbreak.

The German automaker’s factory, jointly operated with its local partner China FAW Group Co., entered a so-called “closed loop system” Thursday evening to maintain production, a company representative said on the phone on Friday, without elaborating. Foxconn, the largest assembler of Apple devices, is also adopting the method at its facility that makes iPads there, according to a person familiar with the decision. 

First used during the Beijing Winter Olympics as a way of keeping athletes and support staff separate from the wider population, closed loops, or factory bubbles, typically require workers to travel from on-site accommodation to the factory and back, strictly avoiding contacts with outsiders, and be tested regularly for Covid. Companies such as Tesla have even kept their workers sleeping on the floor during the Shanghai lockdown earlier this year.  

Chengdu, the capital of Sichuan province, is the biggest city to shut down since Shanghai’s bruising two-month lockdown starting end-March. It also functions as a manufacturing hub in southwestern China for companies including Geely Automobile Holdings and Toyota Motor. 

Volvo Car AB’s Sichuan plant, now under the parent group of Geely, has suspended production due to the lockdown, Reuters reported earlier. In the meantime, Hitachi’s two Chengdu plants that manufacture elevators and escalators are operating at reduced rates due to an order from authorities, Ryuhei Tanaka, a spokesman for the Japanese company said by phone.

Shenzhen shuts public transport

The main districts of Chinese tech hub Shenzhen shut down public transport and extended curbs on public activities on Friday as cities across China battled Covid-19 outbreaks that have dampened the outlook for economic recovery.