Car Manufacturers Are Turning to Mexico Instead of West Coast Ports
Many car manufacturers are no longer looking to the west coast ports for their supply chain needs. The eight month long labor dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union at the west coast ports caused serious delays. Car manufacturers faced shortages in their electronics, transmissions, and other parts that they typically ship through the west coast ports. It was a major supply chain nightmare. That’s causing them to look for better shipping alternatives.
Honda’s production plants in Indiana had to slow down production while the labor disputes were going on at the west coast ports. They did not have the electronic parts needed for their cars. They typically get their parts from San Pedro Bay. Reuters reported that the shipping delays would cost Honda 25,000 vehicles in the month of February alone. The company had to turn to expensive air shipments from Japan to get enough supplies for their assembly line to continue at all. A company spokesman for Honda said, “We are pleased to hear the news that a tentative agreement has been reached and are hopeful the ports will resume normal operations soon.”
Toyota, Nissan, and Subaru faced similar delays to their supply chains because of the west coast port labor disputes. Bloomberg reported that these companies have also had to turn to air lifts to get the supplies they need for manufacturing. This is less than ideal because air shipping is very expensive. All of the major automakers that use the ports started to look for alternative routes.
The west coast ports are up and running again, but they definitely could lose business because of the long labor dispute ordeal. Mexico is one likely solution. There are several ports that could easily take on the business of these car manufacturers. Many manufacturers are strongly considering the possibilities to increase their supply chain capabilities and efficiency.
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