New York (AFP) - The Canadian trucker protest has temporarily sidelined a key auto industry transport route, adding stress to a North American car industry already pinched by low inventories and supply chain problems that have sent vehicle price soaring.
Several leading automakers said Thursday they reduced production and cut labor shifts due to the blockade at the Ambassador Bridge, which links Windsor, Canada with the US city of Detroit.
The bridge has been essentially off-line since Monday night as a two-week uprising led by truckers protesting against coronavirus restrictions has spread from the Canadian capital.
The route is a crucial gateway for the car industries in the neighboring nations, in a region that is effectively a "giant auto industry cluster," said Jason Miller, a professor of supply chain management at Michigan State University.
Miller said finished goods pass north and south over the bridge, while parts and components may cross the border six or seven times during the manufacturing process, making the country of origin essentially irrelevant for the auto industry.
The bridge is used daily by more than 40,000 commuters and tourists, along with trucks carrying $323 million worth of goods on average.
The car industry has relied on easy and reliable access to the bridge since the 1960s, said Fraser Johnson, a supply chain expert at Ivey Business School at Western University.
In an era of "just in time" inventories, "the plants may have anywhere from just a few hours of inventory to just a few days of inventory," he said.
"So as soon as we get disruptions like this, then that puts the continuous operation of the car plants and their supplier in jeopardy."
Worsening the 'already bad' situation
Canadian and American officials and industry groups have warned of significant damage to trade and employment if the disruption is prolonged.
So far, auto companies have described the impact as meaningful but limited.
Ford is running its Canadian plants in Oakville and Windsor at "reduced capacity," a company spokesperson said."We hope this situation is resolved quickly because it could have widespread impact on all automakers in the US and Canada."
A Toyota spokesperson alluded to existing supply shortages, adding that plants in Canada and the state of Kentucky have been affected by "this most recent challenge."
Toyota expects disruption through the weekend but "we do not anticipate any impact to employment at this time," the official said.
After shortening second shifts at some of its US and Canadian plants on Wednesday, Stellantis on Thursday cut short a day shift at one of its Canadian plants, a company spokesperson said.
General Motors canceled one shift at a Lansing, Michigan plant on Thursday and sent assembly workers home a couple of hours early from the first shift at a Flint plant, a GM spokesman said.
The disruption comes as US inventories of new vehicles remain extremely low, and used car prices are still elevated, although the massive increases seen last year have slowed.
Automakers have offered mixed appraisals on the semiconductor picture that has impacted manufacturing.Most companies expect the shortage to ease somewhat in 2022 as long as there are no more semiconductor outages due to Covid-19 restrictions or other unforeseeable reasons.But supply is likely to remain tight through at least mid-year.
"This is piling on to top of an already bad situation -- the microchip shortage, a situation that is not getting solved," said Karl Brauer, analyst at iSeeCars.com.
And Johnson said the disruption at Ambassador Bridge is not easily solved with alternative routes.For example, shifting traffic through Buffalo is problematic because the city's roads lack the infrastructure to handle truck traffic.
Miller said the route also is an important road for other raw materials and goods, such as aluminum exported from Canada to the United States, or plastics shipped in the opposite direction.
"For the auto industry, it's very worrisome," said Miller, who warned the pain will spread to other sectors if the blockade drags on.
