Port slowdowns not heavily affecting Big 3 automakers
Unlike some foreign carmakers, Detroit automakers are not experiencing any “significant” problems in shipping or production due to labor disputes that have slowed shipments at dozens of ports on the West Coast.
Officials for General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV on Friday each said their respective companies have either made alternative arrangements for shipping or are not experiencing any major shortage of parts or shipping problems.
“The West Coast port situation is certainly challenging our supply chain and increasing costs, but it has not had a significant impact on production operations,” said FCA US spokeswoman Jodi Tinson in an email to The Detroit News.
Ford as well as GM sent similar statements. “With the strong support of our suppliers, carriers and manufacturing sites, we've adjusted buffers and established alternate ship contingencies,” said GM spokeswoman Freda Agboka in an email to The News. “In some instances, additional cost occurs because of premium freight.”
Officials declined to provide specific details regarding the impacts to shipping or additional costs.
Japanese automakers, which traditionally rely more heavily on imported parts and vehicles, haven’t been as fortunate.
Due to shortages in parts, Honda Motor Co., Nissan Motor Co. and Toyota Motor Corp. are cutting back production or adjusting overtime at several facilities in North America.
Honda will reduce production at six plants in Ohio, Indiana and Ontario due to shortages in a “small number of critical parts such as electronics, and some larger assemblies such as transmissions.”
“At Honda, we have been working to maintain the flow of parts to our North American plants, including utilizing alternative means of transportation, in the effort to maintain production for our customers,” the company said in a statement. “Despite our best efforts, however, the prolonged slowdown at the port operations will soon begin to impact some of our North American production operations due to parts shortages.”
Honda said no temporary layoffs are expected. Many plant workers will stay on the job to work on plant maintenance and other business.
In January, the company did began airlifting some parts to the U.S. from Japan. The company reports domestic content of North American-produced vehicles is about 80 percent, thanks to a North American supplier network of more than 700 companies.
Toyota said Friday it has adjusted overtime at some of its North American plants because of the port issue and that it’s changed the way it’s handling shipments.
“In an effort to minimize production disruptions Toyota is expediting shipments by air — a standard shipping method we use as needed,” the automaker said in a statement. “We continue to monitor the situation.”
A Toyota spokeswoman said they couldn’t provide additional details about which plants were affected because the port situation is fluid.
Nissan said there has been “some impact” on its parts shipments to the U.S. West Coast, and it has started limited use of air freight to deliver parts from countries in Asia to the U.S. A spokesman said the localization of parts is high, and the automaker believes there will be minimal impact on Nissan’s operations.
Automakers use ports all over the country to import and export parts and vehicles all over the globe.
According to the Motor and Equipment Manufacturers Association, the economic impact due to the labor disputes could reach as much as $ 1 billion per day.
The labor disputes involve 29 ports on the West Coast that handle about one-quarter of U.S. international trade. Since May, the union representing dockworkers has been negotiating with the ports’ operator, Pacific Maritime Association, with no resolution.
Some importers have reacted by diverting shipments to ports on the East and Gulf coasts.
Others have turned to air cargo, paying a premium that can be five or more times more than the cost of seaborne shipments.
Pay remains an issue in the negotiations. Employers say dockworkers have intentionally slowed their work for months and won’t be rewarded with higher wages. The dockworkers’ union denies slowing work.
The port controversy comes as automakers, following the 2008-2009 recession, have reported record profits and consistent increases in sales. In 2015, U.S. vehicles sales are expected to climb to near 17 million, up from 16.5 million in 2014.
The Associated Press contributed.