Despite the Ambassador Bridge's reopening late Sunday, the economic effects of the week-long closure of a prime U.S./Canada trade corridor will be felt by the auto industry and others for weeks, experts say.
Auto production will still be affected as automakers and their suppliers scramble to get parts to plants on time for this week's run. The border blockade is another supply chain hit on top of several the automakers have had to battle through in the last year. Dealer lots are near empty while the demand remains strong, leading to record-high prices.
"Even if everything started flowing smoothly across the Ambassador Bridge today, you would still have trucks that were redirected, shipments that were stalled, plants that were shut down, shifts that were rescheduled and products that didn't get to market," said Patrick Anderson, president and CEO of Lansing-based Anderson Economic Group.
"All of this is creating havoc in an industry that's already stretched to the tightest supply chain situation in recent history."
The Detroit Three automakers were all affected by the closure of Ambassador that led to hours-long delays at another port of entry in Port Huron. Production at various plants was cut short last week as a result of parts shortages related to the border situation.
Autoworker wage losses from the border blockades in Michigan alone could total more than $51 million in the first week, Anderson Economic Group estimates, but Anderson noted that's just "the tip of the iceberg."
Stellantis NV, maker of Ram trucks and Jeeps, saw production impacts at both U.S. and Canadian plants last week.
"We will not comment on projected losses, but will look to make up that production in the coming months," spokeswoman Jodi Tinson said. "We are working with our carriers to get parts into the plants as quickly as possible to mitigate any further disruptions. We expect to resume operations Monday morning as scheduled."
GM and crosstown rival Ford Motor Co. also both saw production in both Canada and the U.S. affected last week.
"Through this entire situation, our focus has been on working with our supply base to mitigate any part shortage issues," GM spokesman Dan Flores said in a statement. "We will continue to do that until the situation is fully resolved. Beyond that, we have no additional comment."
Windsor Mayor Drew Dilkens said Sunday that the Ambassador Bridge's reopening brings Canada's "national economic crisis" to an end. The bridge had been blocked to traffic since Monday evening, when a protest at the Capitol in Ottawa against vaccine requirements for truckers moved to other cities across the country and to the trade thoroughfare connecting Canada to Detroit.
Police arrested 25-30 people by Sunday. Those arrested face criminal charges.
"Observing the depth of protests in Canada, over the last week, I have been reluctant to assume that the Canadian authorities have everything under control or that this crisis is going to end soon," Anderson said.
"Until the Freedom Convoy movement started affecting trade across the Ambassador Bridge," he added, "this was largely ignored in the United States, and it's caught a lot of the American civic leaders and business community totally flat-footed."
The Windsor-Detroit Bridge Authority estimates 7,000 trucks cross the corridor every day, totaling roughly 2.5 million trucks each year. The authority says that represents more than $100 billion in bilateral trade every year.
The blockade and delays led Brian Hitchcock, who owns MBH Trucking out of Webberville near Lansing and is the chairman of the Michigan Trucking Association, to only transfer a couple of loads across the border instead of the 15 he likely would have transferred.
Hitchcock lost half his drivers on the roster for Canadian deliveries once the government instituted a vaccine mandate last month. Though the protests have disrupted his business, he says "he understands where they're coming from."
"I just don't feel that it's right for a government or company to have to mandate a requirement," he said.
The reopening of Ambassador Bridge will be good "for all commerce in and out of Michigan," he said, adding the Canadian government still needs to come to a solution with the protesting truckers.
While other industries in Michigan, including energy and agriculture, will also feel the effects of the commerce disruption between the state and Canada, the transportation industry is likely to be hit hardest given the amount of trade in the sector.
Michigan imports $33.3 billion in goods from Canada annually and transportation represents 52% of that, according to the Canadian Trade Commissioner, and 48% of Michigan's $17.3 billion in exports to Canada are for the same sector.
Peter Nagle, principal research analyst of automotive economics at IHS Markit, said in a note late last week the cross-border trade in both vehicles and core parts between the two countries was $51.5 billion. Daily flow in vehicles and parts totaled over $141.1 million a day, Nagle added, or nearly $988 million over seven days.
If the situation gets resolved, IHS still expects the return to regular supply operations will take weeks as the impact of the border blockade makes its way through the supply chain.
The border situation's effect on production comes as automakers are still handling a shortage of supplies, especially of semiconductors or chips that are used to power everything from the heated steering wheel to the infotainment system. The pandemic-induced supply shortage on that product alone cost the automakers billions of dollars of revenue with several plants simultaneously shut down throughout 2021.
The shortage has led to tight vehicle inventory levels on dealer lots and higher prices. The average transaction price for a new vehicle was $46,404 in January, down slightly from December's record $47,077, according to Kelley Blue Book.
Those high prices are expected to remain with demand staying strong and automakers continuing to see supply crunches, like the ones caused by the border blockades and delays that will take weeks to get sorted.
"It's a complicated untangling," said Erik Gordon, a professor at the University of Michigan's Ross Business School. "It'll take a couple of weeks to get the assembly plants stocked with the right proportion of parts for the plants to be back up to full speed.
"So you may have plants that are working at half speed or fewer shifts. But to get plants up to their pre-blockade speed, that could easily take a couple of weeks."
