All politics may be local (as Tip O’Neill famously asserted) but a local labor action can now have ramifications around the globe. In late September, workers at a plant of Rico Auto Industries near New Delhi, India, went on strike. That has led to assembly plants across the Midwest shutting plants shutting down. Note that that’s India, not Indiana.
This has reflects a strange set of circumstances in part because both Ford and GM are affected. As Automotive News reported (Transmission sharing exposes Ford, GM, Oct 30), the two firms co-developed a transmission and also opted to share suppliers.
The co-development by Ford and GM of a new six-speed transmission was heralded as a money-saver when it was announced in 2002. Instead of each company racing to develop the fuel-saving technology separately, they decided to share the nearly $720 million investment and even use the same suppliers. But that collaboration has left them equally susceptible to a parts shortage by a single supplier in India.
That has left both firms reshuffling supplies and production plans. That one transmission goes into a surprising number of vehicles and as supply has run short, both OEMs have been left robbing Peter to pay Paul. Again from Automotive News, we have (Ford production suffers even as strike at Indian supplier ends, Nov 6)
Ford’s Oakville, Ontario, plant was closed last and GM’s Delta Township, Mich., plant was scheduled to be closed this week. Delta Township, near Lansing, builds the Buick Enclave and GMC Acadia. It is being retooled for the Chevrolet Traverse crossover. Oakville builds the Ford Edge and Flex, and the Lincoln MKX and MKT crossovers.
Much of Ford’s reshuffling has aimed to keep the “hot new” Taurus (a phrase unuttered since Reagan was president) in production. The strike was resolved at the end of the last week but that was long enough for Ford to run out of options. Its plant here in Chicago won’t be open on Monday and there will be no Tauruses (Tauri?) rolling off the line.
This is just an interesting story. Car parts are tricky things. Some may seem like commodities but fundamentally it is time consuming to identify and qualify suppliers. Hence, car makers have always been subject to being held up by parts suppliers. This is something the UAW has learned pretty well. There is no need to strike against all of GM when having the right local at the right plant can stall all production. At least when the UAW strikes against a GM owned plant, the folks in Detroit have pretty good grip on what is happening. That seems harder to do when the strike is taking place beyond the reach of US courts. As more high value are sourced overseas, it will be interesting to see if such disruptions become more frequent.