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GM follows Ford in closing crossover plant

DETROIT -- The labor violence at an Indian supplier that forced Ford Motor Co.'s Oakville, Ontario, plant to close this week has hit another U.S. automaker.

General Motors Co. will have to close its Delta Township, Mich., crossover plant all of next week because of a parts shortage caused by the strife in India.

Delta Township, near Lansing, builds the Buick Enclave and GMC Acadia and is being retooled for the Chevrolet Traverse crossover. Oakville builds the Ford Edge, Ford Flex, Lincoln MKX and Lincoln MKT crossovers.

Ford and GM share Indian transmission parts supplier Rico Auto Industries in the industrial city of Gurgaon, 30 miles outside of New Delhi. A Ford spokesman confirmed its relationship with Rico earlier this week. Another source familiar with the situation confirmed GM's relationship with Rico today.

A Rico representative in London said the company is in constant contact with Ford and is producing parts for the automaker. He said he could not discuss the GM situation because the company handles GM matters in other offices. Attempts to reach other Rico officials in the United States and India were not successful.

Escalating labor issues

Labor strife escalated after the Oct. 18 death of a Rico employee during a clash between temporary workers and factory staff, the source said. A local court ruled a strike there illegal, but too many workers remain off the job to produce the quantity of parts required by GM, the source said.

GM spokeswoman Heidi Magyar said the Delta Township plant will be closed next week because of the shortage of a critical part. She declined to identify the part or its supplier.

The unrest raises questions about the stability of India to be an export platform of parts to the U.S. auto companies.

Greg Coppola, managing director of the management consulting firm BBK Ltd. in suburban Detroit, said yesterday that the Indian auto market remains potentially too lucrative not to continue investing there.

Export issues

But the labor problems outside of New Delhi, coupled with the general logistic challenges of shipping from India, have reduced the attractiveness of relying on Indian parts for use here, said Coppola, who participated on a panel at the Automotive Supplier Finance Summit, co-sponsored by PriceWaterhouseCoopers and the law firm of Skadden, Arps, Slate, Meagher & Flom.

GM will lose production for one week starting Monday, Nov. 2. The automaker builds about 900 Enclaves and Acadias a day or about 3,600 in a four-day week of 10-hour shifts. The plant is on a two-shift schedule, GM says.

Ford will lose production of several thousand crossovers made at Oakville, Ford spokesman Todd Nissen said earlier this week.

About 3,000 workers in Oakville will be affected by the shutdown, said Gary Beck, president of the Canadian Auto Workers local that represents workers at the plant.

Nissen said Ford is monitoring the situation, which could affect other Ford plants.

Jamie LaReau contributed to this report

You can reach Robert Sherefkin at rsherefkin@crain.com.


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ENLARGE
A parts shortage will cost GM its weekly production of 3600 Buick Enclaves, pictured here, and GMC Acadias.


 

 

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