How Canada’s trucker blockade is straining the auto industry: Expert

After six days, truckers protesting COVID-19 vaccination mandates ended a blockade at the busiest border crossing between the United States and Canada. Although the Ambassador Bridge blockade may be over, Bernard Swiecki, director of research at the Center for Automotive Research (CAR), believes it could have significant implications for supply chains and the automotive industry.

“Normally when you have a supply chain disruption like this, you can recover a lot of it by building vehicles overtime, recovering some of those production volumes and recovering what you lost “, Swiecki told Yahoo Finance Live. . “However, it’s a lot harder to do when you’re also dealing with the shortage of semiconductors and all these other issues. So for me, it kind of takes you twice.

Swiecki joined Yahoo Finance Live to discuss how convoy protests are disrupting the auto industry. CAR is a non-profit think tank that conducts research on important issues concerning the global automotive industry and its future.

The blockade of the Ambassador Bridge, which connects Detroit, Michigan, to Windsor, Ont. — was part of the broader trucker-led movement against vaccination mandates seen in Canada. And as the members of the “Freedom Convoy” who converged on Ottawa on January 28 continue to occupy the streets of the city, while local and federal Canadian authorities continue to scramble to evict protesters, questions remain about the how the unrest will affect cross-border industry and commerce.

According to Swiecki, the auto industry’s most vulnerable suppliers, rather than automakers themselves, have borne the brunt of the disruption caused by the protests.

Vehicles continue to clog downtown streets as truckers and supporters continue to protest coronavirus disease (COVID-19) vaccination mandates, in Ottawa, Ontario, Canada February 15, 2022. REUTERS/Blair Gable

“Due to the pandemic and shortages of semiconductors, automakers have focused on producing expensive vehicles. [with] high transaction values, and some of them have therefore achieved record financial results over the past two years,” he said. “And that hasn’t been the case for suppliers because their business depends on volume. So the fact that the industry is making more expensive vehicles hasn’t really benefited them the way it has benefited automakers.

Ultimately, the closure of the Ambassador Bridge will have halted billions of trade between the United States and Canada. About 40% of the goods crossing the bridge include auto parts and equipment as well as electrical machinery and equipment, which will have serious ramifications for a US auto industry already struggling with a global supply shortage.

Manufacturers see factory closures

Ford (F) and GM (GM) have seen several manufacturing sites affected by the blockade, with traditional automakers announcing shift cancellations or the temporary closure of entire plants. Other automakers that have been affected by its operations include Stellantis (STLA) and Toyota (TM). Closures have been reported by automakers for assembly plants on both sides of the border.

Swiecki noted that the closures started near the border and spread further into the United States and Canada due to logistical constraints.

“And I expect the reopenings of those factories to follow a very similar pattern, where the factories closest to the border can be restocked as soon as possible when the border is open,” he said. “But it will take longer for the transport system to deliver the components to the most distant factories.”

Ihsaan Fanusie is a writer at Yahoo Finance. Follow him on Twitter @IFanusie.

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