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Shutdowns likely to continue

Sporadic shutdowns of assembly lines are expected to continue this week as the North American auto industry adjusts its just-in-time production systems to the limitations of tighter security at U.S. borders.

In the aftermath of the terrorist attacks on Tuesday, Sept. 11, automakers lost 47,123 units, or 13.6 percent, from their scheduled North American production plans of 346,034 units last week. The reasons:

  • Transportation bottlenecks at U.S. borders.

  • Canceled shifts because of parts shortages.

  • Proximity of plants to the attacks, or closures at the request of state officials.

    Higher security at the Canadian and Mexican borders disrupted the industry's just-in-time production systems. The backups meant parts suppliers were forced to carry more inventory in their trucks for a longer time, raising shipping and inventory costs and causing shortages at assembly plants.

    "The vehicle manufacturers are swallowing extra costs when things hit them," said Neil De Koker, managing director for the Original Equipment Suppliers Association in Troy, Mich. "I'm sure they're expecting the suppliers to swallow costs" until everything gets back to normal.

    How output changed
    What automakers planned on building and what was built last week
      Scheduled production week of 9/10/2001 Estimated production reflecting canceled shifts and shortages 9/10/2001 Units lost week of 9/10/2001 Percent decrease
    AutoAlliance 1,951 1,756 195 –10.0
    DaimlerChrysler 60,798 53,198 7,600 –12.5
    Ford 89,308 68,884 12,215 –22.9
    GM 111,869 97,568 14,301 –12.8
    Honda 21,356 19,884 1,472 –6.9
    Mitsubishi 4,133 4,009 124 –3.0
    Toyota 16,549 13,542 3,007 –18.2
    Total of affected manufacturers 305,964 258,841 47,123 –15.4
    Total North America production 346,034 298,911 47,123 –13.6
    Source: Automotive News Data Center

    Assembly lines stopped

    In previous incidents of border backups, suppliers have compensated by shipping parts by air, De Koker said. That option was blocked last week when the government grounded all air traffic. Air cargo operations are expected to resume slowly.

    General Motors faced a series of plant stoppages in the days after the attacks. It closed its truck plant in Linden, N.J., near New York. The Saturn plant in Wilmington, Del., and the minivan plant in Baltimore were closed Tuesday at the request of state officials.

    Parts shortages caused GM to shorten or cancel shifts at plants in Oshawa, Ontario; Janesville, Wis.; and Pontiac and Flint, Mich., during the rest of the week.

    DaimlerChrysler shut down all its U.S. plants on Tuesday and lost a few hours of minivan production in Windsor, Ontario, on Thursday, Sept. 13, because of a parts shortage.

    Ford Motor Co. lost about 12,000 units of production on Tuesday when it shut all its U.S. assembly plants. Those plants reopened the next morning but lost 4,300 units of production because of abbreviated shifts. Ford gave plant workers some time off on Friday, Sept. 14, to honor the victims of the attacks.

    Commercial trucks were delayed up to 18 hours at border crossings between Michigan and Windsor, Ontario, forcing Ford to close temporarily the Mustang plant in Dearborn, Mich., and the Focus plant in Wayne, Mich.

    To offset parts shortages, Ford diverted freight to less clogged ports and hired barges to move components across the Detroit River to and from Canada. But by the end of last week barge traffic also had been slowed by security measures, Ford spokeswoman Cheryl Eberwein said.

    Transplants affected

    As of Thursday, Mercedes-Benz's M-class plant in Vance, Ala., was getting all the parts and supplies it needed, spokeswoman Felyicia Jerald said. But the plant was concerned about future interruptions because it gets some of its parts by air freight, she said.

    Parts shortages did not affect BMW's assembly plant in Greer, S.C., spokeswoman Bunny Richardson said. But the automaker stopped production from midday Tuesday until Wednesday morning, eliminating 1 shifts out of respect for the victims.

    Most of the U.S. parts the Greer plant uses are delivered by truck, while the majority of its parts from overseas suppliers are sent by ship and then trucked to the plant.

    Shifts were canceled at Toyota Motor Manufacturing North America's Georgetown, Ky., assembly plant on Thursday and Friday because of a delay in Toyota Camry parts coming across the Canadian border.

    Higher inventories

    "We may have to put a little more inventory in the system," to compensate for the parts shortages, said Gerald Fedchun, president of the Automotive Parts Manufacturers' Association in Toronto.

    The border slowdowns will continue to affect automakers in the near term, said Jeff Schuster, an analyst for J.D. Power and Associates in Troy, Mich.

    He expects intermittent shutdowns at assembly plants through this week.

    "There are things that can be done over the midterm to counter this by shifting the volume of components production to different facilities," Schuster said.

    He mentioned the possibility of pre-inspections for auto industry trucks. That is an issue the Canadian parts group also has been trying to push, Fedchun said.

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