Auto pipeline squeezed
October 4, 2002
BY JEFFREY MCCRACKEN, JAMIE BUTTERS AND JOHN GALLAGHER
DETROIT FREE PRESS BUSINESS WRITERS
The west coast port lockout has begun strangling the national economy while slowly squeezing off the auto industry's pipeline, shutting one auto plant in California and threatening to close many more in Michigan and elsewhere.
"I don't know that it will be us that causes it, but an automaker will get shut down next week by someone in the supply chain. Someone will shut down at least one automaker if this isn't resolved by early next week," said Steve Gaut, chief spokesman for Troy-based Delphi Corp., the world's largest auto supplier with about 6,000 suppliers worldwide.
The port shutdown enters its eighth day today. The talks between the International Longshore and Warehouse Union, representing 10,500 workers, and the Pacific Maritime Association resumed Thursday at an undisclosed location in San Francisco.
Ford Motor Co. appears the most vulnerable of the domestic automakers.
Ford has 14 plants, including three in Michigan, that receive parts shipped through the locked-out docks in California, Oregon and Washington. Ford has begun air-shipping parts such as wheels from New Zealand to keep its car and truck assembly plantsopen across the country.
A Ford spokeswoman said the air shipments should keep their plants going "until late next week, then we have to look at something else."
Ford's Michigan Truck plant in Wayne, Van **** transmission plant in Sterling Heights and Dearborn Engine all receive parts through the locked-out ports. The three plants employ almost 6,700 people.
The first plant to be closed was the New United Motor Manufacturing Inc. plant in Fremont, Calif., run by General Motors Corp. and Toyota Motor Corp., which halted production of the Pontiac Vibe and Toyota Tacoma on Wednesday night due to a shortage of parts.
Except for that joint venture, GM has yet to see any interruptions. "But if it goes on, it would certainly, eventually hit us," said GM spokeswoman Renee Rashid-Merem.
The Chrysler Group has sent a letter to its suppliers telling them to warn Chrysler right away if the supplier will not be able to get a part to Chrysler due to the port impasse. Chrysler has no parts coming directly through the 29 ports.
"We know some parts for our suppliers, like memory boards or computer chips for radio and engines, come through those ports, but we have no worry or slowdowns as of yet," said Chrysler spokesman David Barnas.
Foreign automakers Nissan Motor Co. and Mitsubishi Motors America said it would be a struggle to keep their plants in Tennessee and Illinois open beyond early next week.
Shutting a plant can quickly cost an automaker millions of dollars a day, as they must continue to pay workers while expensive plants and machinery sits idle.
The contract dispute between the dockworkers union and ocean carriers is causing massive concern, confusion and scrambling within the auto industry, more than ever reliant on just-in-time delivery and overseas auto parts.
Automakers and their tens of thousands of parts suppliers are struggling to figure out what they have flowing through those ports -- and what their suppliers have. Contingency plans about new ways to ship parts or new routes to use are being drawn up, then rewritten, daily.
Japanese automakers with significant U.S. operations, such as Nissan Motor Co., are getting hit with a double-whammy. Imports of new cars and trucks, which average 3,000 a week, have been halted. And the company's super-efficient manufacturing plant in Smyrna, Tenn., could be shut down as soon as next week, idling about 6,000 workers.
"It's a big problem for us," said spokesman Kyle Bazemore in Torrance, Calif.
Mitsubishi released a statement saying its plant in Normal, Ill., will continue full operations until the beginning of next week, but after that will need a contingency plan to stay open.
Most automakers haven't yet seen a slowdown of parts or production but know that such a thing might not be more than a few days away.
Outside the auto industry, the dispute is equally devastating.
The 29 ports of California, Oregon and Washington handle about $300 billion in cargo annually, dominated by imports of clothing, consumer electronics and furniture for U.S. retailers including Wal-Mart Stores Inc. and Home Depot Inc., not to mention parts for computer makers.
The contract dispute threatens disruption of about $24 billion in U.S. farm exports to Asia, ranging from fruits and vegetables to meat and grain.
Premium Standard Farms Inc. stopped filling Asian orders for chilled pork exports worth $1 million a week. Walgreen Co., the largest U.S. drugstore chain, said it isn't getting the Christmas trees and ornaments it needs.
"I'm appalled that this isn't seen as a national emergency at this point, both economic and security," said David Littmann, senior economist at Comerica Bank in Detroit. "All our goals of better, faster and cheaper are hit by this action."
At the heart of the dispute is the control of new jobs evolving out of improvements in technology used on the waterfront. The union wants its shipping clerks trained to use new computerized equipment for the tracking of containers on and off ships. The shipping companies hope to phase out these clerical positions as union-controlled jobs.
Business groups are becoming anxious about the work stoppage that has choked off trade between the United States and Asia and is costing the U.S. economy an estimated $1 billion a day. Several business groups have asked President George W. Bush to "use all means necessary" to get the lockout solved.
The west coast lockout is having "no discernable effect" on port operations along the Detroit River, said W. Steven Olinek, deputy director of the Detroit/Wayne County Port Authority.
The vessels affected by the strike are large seagoing ships that carry containerized shipments, and those vessels are too big to make it through the system of locks and channels that connect Detroit to the Atlantic Ocean.
Instead, containerized shipments bound for Detroit are dropped off at deep-water ports on the coasts and carried to Detroit via rail. Detroit-area port facilities deal mainly in bulk commodities such as steel, cement, and grain.
Through members of Congress where the automaker does business, Nissan is trying to encourage a rapid resolution. If the labor dispute cannot be settled, the automaker wants the president or attorney general to invoke the Taft-Hartley Act, which can place an 80-day injunction on labor disputes that threaten the "national health or safety."
October 4, 2002
BY JEFFREY MCCRACKEN, JAMIE BUTTERS AND JOHN GALLAGHER
DETROIT FREE PRESS BUSINESS WRITERS
The west coast port lockout has begun strangling the national economy while slowly squeezing off the auto industry's pipeline, shutting one auto plant in California and threatening to close many more in Michigan and elsewhere.
"I don't know that it will be us that causes it, but an automaker will get shut down next week by someone in the supply chain. Someone will shut down at least one automaker if this isn't resolved by early next week," said Steve Gaut, chief spokesman for Troy-based Delphi Corp., the world's largest auto supplier with about 6,000 suppliers worldwide.
The port shutdown enters its eighth day today. The talks between the International Longshore and Warehouse Union, representing 10,500 workers, and the Pacific Maritime Association resumed Thursday at an undisclosed location in San Francisco.
Ford Motor Co. appears the most vulnerable of the domestic automakers.
Ford has 14 plants, including three in Michigan, that receive parts shipped through the locked-out docks in California, Oregon and Washington. Ford has begun air-shipping parts such as wheels from New Zealand to keep its car and truck assembly plantsopen across the country.
A Ford spokeswoman said the air shipments should keep their plants going "until late next week, then we have to look at something else."
Ford's Michigan Truck plant in Wayne, Van **** transmission plant in Sterling Heights and Dearborn Engine all receive parts through the locked-out ports. The three plants employ almost 6,700 people.
The first plant to be closed was the New United Motor Manufacturing Inc. plant in Fremont, Calif., run by General Motors Corp. and Toyota Motor Corp., which halted production of the Pontiac Vibe and Toyota Tacoma on Wednesday night due to a shortage of parts.
Except for that joint venture, GM has yet to see any interruptions. "But if it goes on, it would certainly, eventually hit us," said GM spokeswoman Renee Rashid-Merem.
The Chrysler Group has sent a letter to its suppliers telling them to warn Chrysler right away if the supplier will not be able to get a part to Chrysler due to the port impasse. Chrysler has no parts coming directly through the 29 ports.
"We know some parts for our suppliers, like memory boards or computer chips for radio and engines, come through those ports, but we have no worry or slowdowns as of yet," said Chrysler spokesman David Barnas.
Foreign automakers Nissan Motor Co. and Mitsubishi Motors America said it would be a struggle to keep their plants in Tennessee and Illinois open beyond early next week.
Shutting a plant can quickly cost an automaker millions of dollars a day, as they must continue to pay workers while expensive plants and machinery sits idle.
The contract dispute between the dockworkers union and ocean carriers is causing massive concern, confusion and scrambling within the auto industry, more than ever reliant on just-in-time delivery and overseas auto parts.
Automakers and their tens of thousands of parts suppliers are struggling to figure out what they have flowing through those ports -- and what their suppliers have. Contingency plans about new ways to ship parts or new routes to use are being drawn up, then rewritten, daily.
Japanese automakers with significant U.S. operations, such as Nissan Motor Co., are getting hit with a double-whammy. Imports of new cars and trucks, which average 3,000 a week, have been halted. And the company's super-efficient manufacturing plant in Smyrna, Tenn., could be shut down as soon as next week, idling about 6,000 workers.
"It's a big problem for us," said spokesman Kyle Bazemore in Torrance, Calif.
Mitsubishi released a statement saying its plant in Normal, Ill., will continue full operations until the beginning of next week, but after that will need a contingency plan to stay open.
Most automakers haven't yet seen a slowdown of parts or production but know that such a thing might not be more than a few days away.
Outside the auto industry, the dispute is equally devastating.
The 29 ports of California, Oregon and Washington handle about $300 billion in cargo annually, dominated by imports of clothing, consumer electronics and furniture for U.S. retailers including Wal-Mart Stores Inc. and Home Depot Inc., not to mention parts for computer makers.
The contract dispute threatens disruption of about $24 billion in U.S. farm exports to Asia, ranging from fruits and vegetables to meat and grain.
Premium Standard Farms Inc. stopped filling Asian orders for chilled pork exports worth $1 million a week. Walgreen Co., the largest U.S. drugstore chain, said it isn't getting the Christmas trees and ornaments it needs.
"I'm appalled that this isn't seen as a national emergency at this point, both economic and security," said David Littmann, senior economist at Comerica Bank in Detroit. "All our goals of better, faster and cheaper are hit by this action."
At the heart of the dispute is the control of new jobs evolving out of improvements in technology used on the waterfront. The union wants its shipping clerks trained to use new computerized equipment for the tracking of containers on and off ships. The shipping companies hope to phase out these clerical positions as union-controlled jobs.
Business groups are becoming anxious about the work stoppage that has choked off trade between the United States and Asia and is costing the U.S. economy an estimated $1 billion a day. Several business groups have asked President George W. Bush to "use all means necessary" to get the lockout solved.
The west coast lockout is having "no discernable effect" on port operations along the Detroit River, said W. Steven Olinek, deputy director of the Detroit/Wayne County Port Authority.
The vessels affected by the strike are large seagoing ships that carry containerized shipments, and those vessels are too big to make it through the system of locks and channels that connect Detroit to the Atlantic Ocean.
Instead, containerized shipments bound for Detroit are dropped off at deep-water ports on the coasts and carried to Detroit via rail. Detroit-area port facilities deal mainly in bulk commodities such as steel, cement, and grain.
Through members of Congress where the automaker does business, Nissan is trying to encourage a rapid resolution. If the labor dispute cannot be settled, the automaker wants the president or attorney general to invoke the Taft-Hartley Act, which can place an 80-day injunction on labor disputes that threaten the "national health or safety."