Prompt inventory delivery is an essential element of a profitable automotive industry, and Chrysler Group LLC sees delays at the U.S.-Canada border as driving up costs. The bridge between Detroit and Windsor, Ontario, is 83 years old, and bottlenecks are common, despite the fact that it’s the world busiest commercial border. That’s why Canadian Prime Minister Stephen Harper has announced intentions to invest over $550 million to help build a new extension to the Ambassador Bridge, so that commerce will be served.
Underscoring the idea that time is of the essence for the automotive business – because time equals money – Chrysler Canada CDEO Reid Bigland noted that prompt inventory deliver is “the name of the game,” not “just-in-case.” The Canadian government relies heavily on U.S. economic product, and as cross-border business increases, the need for more efficient commerce grows in importance. As much as 85 percent of Canadian exports go into the U.S. (a record high reached in 2001), making suitable access essential. Sales by Guelph, Ontario-based parts manufacturer Linamar Corp. into the U.S. increased 29 percent last year to $175.7 million, and there are many more automotive-related businesses with similar numbers.
Build that bridge
Over $127 billion in shipments cross the Detroit-Ontario border each day, on over 8,000 trucks, according to Canadian governmental data. The Ambassador Bridge carries 25 percent of total truck commerce between the U.S. and Canada, with over 7 million vehicles per year. Any delays in processing add “unnecessary costs” to the ledger for automakers, noted Bigland. As such, General Motors, Ford, Toyota, Honda and other automakers are all in support of an improved bridge between Detroit and Windsor.
The bottlenecks on the old bridge have been disruptive, notes Linamar chief technology officer Mark Stoddart.
“We have had customers indicate to us that the bridge issue is a concern that they have in sourcing Linamar,” Stoddart said.
In December, President Barack Obama and Harper met to discuss how the U.S. and Canada could strengthen trade ties. Canada has been exporting more to China in recent years, particularly in the wake of Obama’s rejection of TransCanada Corp.’s $7 billion Keystone XL pipeline to ship Canadian oil to U.S. refineries in the Gulf of Mexico. Completing the Ambassador Bridge project, which is estimated at $3.9 billion when new customs plazas are included, will aid trade between the two nations immensely. Tolls collected on the Canadian side of the border will reportedly go to the private company that will design, build and operate the bridge. Unfortunately, as Michigan is in a severe economic depression, the state will not contribute money toward the project at this time.
“Michigan has ‘gone through many difficult years,” Governor Rick Snyder told reporters recently. “We aren’t in a position to do this. They’re reaching out to help us,” he said of Canada.
Detroit-Ontario bridge construction will reportedly create 12,000 jobs annually for the four years projected for the project, said the Center for Automotive Research in a June 14 study.