Auto Industry Losing Millions of Dollars Weekly
With new cases of the Omicron variant beginning to lessen, there were hopes by many life might slowly return back to a pre-pandemic state. February is a month that traditionally feels the brunt of a tightened supply chain due to Lunar New Year celebrations, but this year the strain on the supply chain is coming from border protests on the North American continent.
Three border crossings have been closed or affected by a group of Canadian truckers who are protesting Covid mitigation measures. Thousands of truckers have joined forces to fight a mandate that all Canadian truckers must be fully vaccinated or quarantine in their homes for two weeks after crossing the US-Canada border. The protests have been declared unlawful by police, but for the majority of the protests practically zero arrests have been made.
What Caused the Border Protests?
The so-called “Freedom Convoy” began in the western Canadian provinces with the goal of driving to the Canadian legislative capital, Ottawa, and remaining there until the mandate was lifted. Previously, truckers had been exempt from any form of vaccine mandate in an effort to keep the supply chain operational during the height of the pandemic. Since arriving in Ottawa, the truckers and other like-minded protesters have effectively shut down the city. There were rumors that similar protests might occur in Los Angeles, who hosted Super Bowl LVI on Sunday, February 13th.
The protest has spread from the capital to border crossings in multiple Canadian provinces, crippling the trade of goods between the United States and Canada. The Ambassador Bridge, which carries over one quarter of all trade between the two countries has attracted the most attention from protesters and media, alike.
Who Is Most Affected?
For the moment, the people feeling the brunt force of the protests are autoworkers at factories in Michigan, Kentucky and Ontario, Canada. Due to a lack of materials, employees’ hours have been cut back. Economists estimate that workers in Michigan, alone, lost $51 million dollars during the week of February 7th to February 13th. Factories typically keep two weeks worth of supplies on hand, but if the bridges remain closed much longer, “then you’re looking at layoffs,” says Carla Bailo, the president of the Center for Automotive Research in Ann Arbor, Michigan. This loss of wages extends throughout the entire community, with people spending less money on food and entertainment while their hours are curtailed. It is a stark reminder of how precarious the global supply chain can be.
Additionally, the communities of Detroit and Windsor, Canada, where the Ambassador Bridge is located, are acutely feeling the pressure of the protests. The required police presence at the border protests, while leading to few arrests, has led to an increase in 911 response times for the rest of the cities. Additionally, in Ottawa, the epicenter of vaccine protests, the downtown area has been in a state of deadlock for several weeks. Businesses are closed simply because it is impossible to get to their doors due to the immense crowds.
The recent lack of steel and aluminum from Canada compounds upon the shortage of semi-conductors to drive up the value of both new and used vehicles. After announcing their earnings report for Q4 2021, Ford stocks fell 6%. However, Ford reported profits of over $10 billion dollars in 2021 and remains “bullish” on 2022.
When Will the Border Protests End?
On Sunday morning, February 13th, following an injunction from a Canadian judge that entered in to effect on Friday evening, police began to arrest the truckers blockading the border crossings. While tow trucks removed vehicles, hundreds of pedestrian protesters remained. The road from Detroit into Windsor was partially re-opened, but it will take some time for auto plants on both sides of the border to rev back up to full production.
It is difficult to say when the borders will become fully operational, but goods are making their way, slowly, across the border. Prime Minister Trudeau, for the first time, invoked the Emergencies Act on Monday, February 14th, which gives the government more power to suspend citizens’ right to free movement and prevent financial support of the protests. However, the vaccine mandate was not repealed and after seeing the success of their initial protest it is likely there will be subsequent blockades in the coming days.
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