Ford and GM Crossover Production Halted Due To Indian Labor Strife

Edward Niedermeyer
by Edward Niedermeyer

Well, the “what makes an American car American” debate just got a little more interesting (and a lot more interesting than the “who ‘won’ the CTS-V Challenge” rigmarole). Automotive News [sub] reports that Ford’s Oakville, Ontario plant and GM’s Delta Township plant have ceased production of Flex, Edge, MKX, MKT, Acadia, Traverse and Enclave as supplier Rico Automotive is unable to supply key transmission components. The reason for the parts stoppage: labor violence… in India. Turmoil at Rico’s plant in Gurgaron (30 miles from New Delhi) came to a head on the 18th, when clashes between temporary workers and factory staff left an employee dead. Now GM stands to lose 7,200 units of production, while Ford admits “several thousand” units won’t be built over the next week. This striking illustration of how globalized the auto industry is, is causing some analysts to question the wisdom of using Indian suppliers. They argue that labor unrest like this is common in the subcontinent, compounding already-challenging logistical and shipping-cost issues. But GM and Ford aren’t exactly about to stop investing in Indian firms and production capacity either, since that market shows more growth potential than the US. One thing is for sure: there’s no such thing as an “American car,” let alone an “American car company” anymore. Government ownership notwithstanding.

Edward Niedermeyer
Edward Niedermeyer

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  • Rod Panhard Rod Panhard on Oct 30, 2009

    1. Honda's jet isn't being built, yet. 2. Globalism isn't new. It was one of the causes of the European renaissance. 3. Globalism isn't new in the automotive business, either. Fiat had a factory in the US in 1908. 4. Stuff happens. Wait and see what happens with next week's sales reports for October. Ford and GM might not need those transmissions .... yet.

  • Christy Garwood Christy Garwood on Oct 30, 2009

    @TriShield - Burgers and bacon in Japan have a taste of fish since it is a cheap source of feed for livestock. @bwell - dual sources are costly to manage in terms of tooling costs and quality costs. No two tools are ever built exactly the same, so managing build variation from two tools can become an initial quality nightmare as well as a reliability nightmare. Multiple tools are built however because of high volumes but rarely as a backup source of supply. And relative to nuclear war, natural disasters as well can wreak havoc with supplies, typhoons in Taiwan typically topple machine tool suppliers. @Greg Locock - in any industry, a good purchasing decision evaluates the cost of the widget, the tooling cost to produce the widget, and the transportation and packaging costs (and cost to design the widget if you are not designing in house). @grog and Greg Locock - Michigan used to have docile, inexpensive labor until they realized they were being exploited. This famous strike resulted in better treatment of the workers. SE Asian workers are now where northern US workers were in the mid 1930's. Southern US workers are actually paid on par with UAW workers. The difference was in the retirement and health benefit. (Who really wants to rely on Social inSecurity and Medicare-NOT in their golden years? show of hands?) @ Mr Carpenter - jet engines and bombers did not have to meet federal safety and fuel economy ratings in the 1940's like vehicles today do. And having worked at the former division of GM called Allison Gas Turbine, now Rolls Royce, I can tell you that engine development started in 1989 for an engine that would be on the market in 2000. FAA requirements were so stringent then that quality departments had to have tracability back to the mine where the ore was extracted for turbine wheel forgings in the event of a failure. @mtymsi - There are other reasons for sourcing in another country besides price. If the long term strategic plan is to be able to sell the finished product in another country, some countries require a certain percentage of the assembly to be produced in that country. The USA does not have such strictures. @DweezilSFV - Israel is known for great manufacturing skill with excellent quality. But some companies put a high price on the risk of sourcing there because of the Mid East turmoil that has existed, how many years now? @EN - regarding American car companies, IIRC, GM still has the highest percentage of North American (Canada, Mexico, US) made parts and labor content in its vehicles sold in North America than others, roughly 75%. And in fact, how many products, let alone cars, are American any more? Let the analysts opine all they want about the wisdom of globalization. It started thousands of years ago and the evidence is in shipwrecks where they find 1000 year old Chinese stoneware decorated with Persian motifs in the Indonesian straits. (full disclosure, I work for GM)

  • Psarhjinian Psarhjinian on Oct 30, 2009
    You know Coke is mixed all over the world and it isn’t any less Coke. Nor is a McDonald’s burger in a foreign country. Well, yes and no. You have to make the distinction between products and brands. Many people (especially the guy I see around town with a "Buy Domestic/Save Jobs!" on his Mexican-built Chevy Uplander**) fail to understand this. Coke, McDonalds, Apple, Nike, Ford and such are American brands. For every dollar you spend with them, the "profit" portion that isn't reinvested is profit for the American company. With many products, the bulk of your dollar offsets the cost to produce, distribute, market, etc. Not all of that dollar goes to America. If you take an environmental or local-economy tack on things, then you should spend money on products that benefit your local economy and have the least environmental and economic cost to distribute. Buying a Korean built and designed Chevy, for example, to "support domestic jobs" doesn't fall into this category, even though the brand is more "local". You're better off to buy the Canadian-made and (largely) Canadian-sourced Honda that actually does support domestic jobs. There are grey areas: products can be designed in America, with local design assistance and assembly in China, shipped by an Indonesian logistics firm, trucked by a Canadian, marketed by Americans. Despite all that, you pay a price, and in that price is the salaries and overheads and costs involved at all these stages. Some of it is local, or at least in the same country. Some is not. Visualize your dollar is being cut up into portions, and each portion going to a different part of the world. If you care about these things, you want to spend your money on products where the biggest "portions" of the dollar are closest to you. That the "brand" is American doesn't often factor in, unless you work on Madison Ave. ** I live in Ontario, Canada
  • Charly Charly on Oct 30, 2009

    The strike started 21 September. Didn't know that shipping was that fast. Thank god it affects the slow selling models first.