Border plants feeling strain of cargo ship delays on West Coast

Border Report

Industry leaders say shipping woes, computer chip shortage shore-up case for switching to suppliers closer to home

Dozens of cargo vessels are seen anchored offshore, sharing space with about a half dozen oil platforms, before heading into the Los Angeles-Long Beach port, Tuesday, Oct. 5, 2021. (AP Photo/Eugene Garcia)

EL PASO, Texas (Border Report) – The container ship glut off the California coast is reverberating at border manufacturing plants that rely on raw materials and parts from Asia.

Some of these plants are having to schedule work-stoppages, reduce shifts and even effect layoffs to compensate for lost production, said Thor Salayandia, president of the Juarez Chamber of Industry and Manufacturing.

“In the end, it all translates into lost production and lost wages. We are worried that the delays in the supplies getting to Mexico could lead to mass, short-term layoffs,” he said.

According to the Associated Press, more than half a million containers are waiting to be off-loaded from ships off at the two largest California ports. Labor and transportation shortages are mostly to blame.

“It’s affecting our automotive manufacturing plants that have components that come from China,” said Jerry Pacheco, president and CEO of the New Mexico-based Border Industrial Association. “It’s not shutting businesses down, but our auto plants don’t have what they need to make what they make. They’re making adjustments and continuing to work with what they got.”

The shipping delays are the latest woe hitting the border plants, known as maquiladoras. Many of these manufacturers have been dealing with a computer chip shortage – a key component for auto manufacturers – for the past few months.

Thor Salayandia, president of the Juarez Chamber of Industry, talks about the computer chip shortage and the shipping delays from Asia hindering production at Juarez automotive plants. (Border Report photo)

Juarez is an “auto town,” so as many as two out of three of its factories have already adjusted to lower production schedules, Salayandia said. That’s bad news not only for a good chunk of the 300-plus factories in Juarez, but also for some of their 330,000 workers. The plants have cut back 7,000 jobs through the end of August, he said.

Both Pacheco and Salayandia say the container ship problems shore up the case for re-shoring – relocating their supply chains from far-away Asia to nearby Latin America.

“This is a great opportunity to realign those supply chains, those logistics that were not as efficient or consolidated as we thought. That’s why we need to talk about paying more attention to the needs of manufacturers in Mexico,” Salayandia said.

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