How the Canadian trucker blockade is straining the auto industry: Expert

Thomas Hum
·Writer
3 min read
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After six days, truckers protesting COVID-19 vaccine mandates have ended a blockade at the busiest U.S.-Canada border crossing. Although the blockade at Ambassador Bridge may be over, Bernard Swiecki, research director at the Center for Automotive Research (CAR), believes that it may have significant implications for supply chains and the auto industry.

“Normally, when you have a supply chain disruption like this was, essentially, you can get a lot of it back by building vehicles on overtime, picking up some of those production volumes, and recouping what you lost,” Swiecki told Yahoo Finance Live. “However, that's much harder to do when you're also dealing with the semiconductor shortage and all those other issues. So for me, it kind of gets you twice.”

Swiecki joined Yahoo Finance Live to discuss how the convoy protests are disrupting the auto industry. CAR is a nonprofit think tank which conducts research on significant issues pertaining to the global automotive industry and its future.

The blockade at Ambassador Bridge—which links Detroit, Mich., with Windsor, Ont. —was part of the larger trucker-led movement opposing vaccine mandates seen in Canada. And as members of the “Freedom Convoy” which converged on Ottawa Jan. 28 continue to occupy the city’s streets, with local and federal Canadian authorities still scrambling to remove the protestors, questions remain as to how the unrest will affect cross-border industry and commerce.

According to Swiecki, the more vulnerable suppliers in the auto industry, rather than automakers themselves, bore the brunt of the disruptions caused by the protests.

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

“As a result of the pandemic and the semiconductor shortages, automakers have focused on producing expensive vehicles [with] high transaction values, and so some of them have had record financial results over the last couple of years,” he said. “And that hasn't been true for suppliers because their business is dependent on volume. So the fact that the industry is making more expensive vehicles hasn't really benefited them the way that it has the automakers.”

When all is said and done, the Ambassador Bridge closure will have halted billions in trade between the U.S. and Canada. Around 40% of goods that cross the bridge includes automotive parts and equipment as well as machinery and electrical equipment, which will have serious ramifications for an American auto industry already contending with a global supply crunch.

Automakers see plant closures

Ford (F) and GM (GM) have seen several manufacturing sites affected by the blockade, with the legacy automakers announcing shift cancellations or the temporary closing of entire plants. Other car companies which took a hit to its operations included Stellantis (STLA) and Toyota (TM). Closures were reported by automakers for assembly plants located on both sides of the border.

Swiecki noted that closures began near the border and proceeded to spread further into the U.S. and Canada due to logistical constraints.

“And I expect that the reopenings of these plants are going to follow a very similar pattern, where the plants that are closest to the border can be resupplied the soonest when the border is open,” he said. “But it'll take a longer time for the transportation system to deliver the components to the more outlying plants.”

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

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