Now that the Ambassador Bridge is fully open, automakers are starting to assess the damage. Millions in unexpected expenses and manufacturing delays have extinguished whatever traces of normalcy were left in factories following a year of worsening supply shortages. Now the question is, who will absorb the costs?
Automotive industry analysts at Anderson Economic Group found that the total impact of the Ambassador Bridge blockade is likely to be $155 million for automakers on both sides of the US – Canada border. Lost wages at manufacturing plants are estimated to reach $145 million.
Just as some automakers were beginning to use airplanes to fly parts across the border, Canadian Prime Minister Justin Trudeau invoked emergency powers to force the bridge back open.
The automotive industry is Canada’s second-largest economic export sector, right behind natural resources such as oil and forestry materials. One-quarter of all goods traded between the two countries passes through the Ambassador Bridge linking Detroit, Michigan with Windsor, Ontario. The corridor is crucial for $100 billion in annual trade.
The silver lining
Michael Brady, co-chair of the automotive industry group at Warner Norcross + Judd, told Automotive News that one silver lining coming out of the Ambassador Bridge blockade is that the auto industry was much better prepared to handle unexpected disruptions following 2 years of challenges coming from every direction. Pandemic-related shutdowns and supply chain constraints have ultimately made the automotive industry as a whole more resilient.
Still, adapting to disruptions results in higher production costs. Someone will have to foot the bill. Brady also said that contractual terms are likely to determine who will ultimately absorb the cost of the Ambassador Bridge blockade. Some automakers are more likely to absorb the hit, while others may fight for every last dollar.
Complicating matters further, automakers know they can’t live without the suppliers, and suppliers know that they need good relationships with their clients if they are to stay in business. Right now, suppliers and automakers are taking a wait-and-see approach. They are most certainly consulting their legal and financial teams before making any moves.