Published April 2003

Automakers craft war contingency plans

By John Wolcott
SCBJ Editor

Automotive sources in Detroit say the Iraqi war shouldn’t have much impact on automakers’ ability to produce and ship their new cars and trucks.

Experiences after the terror attacks of Sept. 11, 2001, and weathering the West Coast dockworkers’ strike have honed their procedures for keeping shipments of parts and autos moving via land, air or sea to keep plants operating and dealers supplied.

Delphi Corp., the world’s largest auto-parts manufacturer, recently created what it calls a “war room” at its Troy, Mich., headquarters where teams of production and logistics staff are forming plans for alternate shipping routes or using alternate suppliers if a certain country can’t be entered or shipments are being delayed or blocked by the Iraqi conflict.

Also, the firm has opened a new global Web site to link various employees in global shipping and logistics operations with their colleagues at Delphi’s 190 plants worldwide. The site enables Delphi employees to follow production activity and track the movement of parts around the world.

Another major player in the auto-parts industry, General Motors Corp., also has set up contingency plans for getting needed parts to maintain production. After Sept. 11, 2001, for instance, GM used barges to float seats from a Lear Corp. plant in Canada, across the Detroit River, to support its Hamtramck assembly plant.

“Since 9/11 we’ve paid a lot of attention to these issues,” GM spokesman Tom Wickham told the Detroit Free Press. “We’ve got logistics, shipping and customs people putting plans in place to cross borders or get parts where we need to.”

About 600 trucks deliver parts from Canada to General Motors each day. To keep parts moving across the border, about 100 of those vehicles are equipped with technology that electronically sends customs agents at the border a manifest that includes information about the driver, the trucking company, the parts on board, where they’re from and where they’re going.

Overall, the industry’s goal is to have in place several plans to get parts or materials to plants across the world. If air travel from the Middle East becomes impossible, some could be shipped by sea, or the part might be bought from another supplier.

“We now group different parts of the world by geography and threat level,” said Mark Lorenz, Delphi vice president of operations and logistics, a former U.S. Marine who worked in logistics during Desert Storm in 1991. “If we can’t get something out of Israel or something erupts in Egypt or Turkey, we just execute the plan to buy it somewhere else or ship via another method.”

Among the countries Delphi has ranked as potential trouble spots are Kuwait, Iraq, Iran, Israel and Saudi Arabia.

But the automakers also have a built-in buffer that will help them in case car and truck plants do shut down for a few days or weeks. Most of them, particularly GM and Ford Motor Co., have a large inventory of new cars and trucks at dealerships or assembly plant lots.

At the end of February, the Detroit auto industry reported a 76-day supply of new vehicles, up 17 percent over the 65-day supply they usually have in place, according to Merrill Lynch auto industry research.

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