Mexico’s auto industry, which relies on parts shipped from the United States, could be hit hard if the strike isn’t resolved quickly.
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An ongoing strike by port workers in the United States will have an impact on Mexico, and potentially a “significant” one, according to the president of an umbrella group that represents Mexican industry.
Some 45,000 members of the International Longshoremen’s Association (ILA) went on strike on Tuesday, walking off their jobs at 36 ports on the East and Gulf coasts of the United States.
Auto manufacturing and assembly plants in Mexico, like this Volkswagen plant in Puebla, will likely be the most affected by a protracted strike. (Volkswagen de México)
On Monday, the ILA said in a statement that “the United States Maritime Alliance (USMX) continues to block the path toward a settlement on a new Master Contract by refusing ILA’s demands for a fair and decent contract and seems intent on causing a strike at all ports from Maine to Texas beginning in almost 12 hours.”
Disagreements over wage increases and port automation are the main causes of the dispute.
Reuters reported that “the strike, the biggest of its kind in nearly half a century, has blocked unloading of container ships from Maine to Texas, threatening shortages of everything from bananas to auto parts, and triggering a backlog of anchored ships outside major ports.”
U.S. President Joe Biden said Thursday that he believed progress toward resolving the contract dispute between the ILA and the USMX was being made. However, he didn’t provide
Foreign ocean carriers have made record profits since the pandemic, when Longshoremen put themselves at risk to keep ports open.
It’s time those ocean carriers offered a strong and fair contract that reflects ILA workers’ contribution to our economy and to their record profits.
— President Biden (@POTUS) October 1, 2024
What does the port strike mean for Mexico?
Meanwhile, the president of the Confederation of Industrial Chambers (Concamin), Alejandro Malagón Barragán, said at a shipping industry event that while the strike is taking place in the United States “it will affect us” in Mexico.
“The problem is that if [goods] don’t leave [ports] there they won’t arrive here,” he said.
Malagón predicted that Mexico’s auto industry, which relies on parts shipped from the United States, will be the worst affected sector.
“But we still have to see what arrives by road or train,” he said, adding that Concamin is discussing options with the Washington D.C.-based National Association of Manufacturers and the Texas Association of Business.
President of Mexico’s Confederation of Industrial Chambers Alejandro Malagón Barragán said at a recent shipping industry event that Mexico will be affected by the strike, pointing out Mexican industry is dependent on goods shipped from the United States. (Concamin)
Malagón said that if the strike lasts eight or nine days, it will have “a significant impact” in Mexico.
Claudia Sánchez Porras, general director of the National Chamber of Freight Transportation, said that the organization she leads is looking at the possibility of bringing more goods into Mexico from the U.S. by road.
However, she said that moving freight overland is “extremely costly” compared to transporting it by sea. Costs could increase by 80-100%, Sánchez said.
Mexican exporters that ship goods to ports on the U.S. East and Gulf coast are also set to be affected by the strike.
An opportunity for Mexican ports?
Gerardo Tajonar, president of the National Association of Importers and Exporters of the Mexican Republic, said that there will “definitely” be a “strong impact on the supply chain because our main access to the United States will be by land … [at a time when] maritime transactions were increasing a lot.”
“That will affect us,” he said.
Auto manufacturing and assembly plants in Mexico, like this Volkswagen plant in Puebla, will likely be the most affected by a protracted strike. (Volkswagen de México)
Shortages of imported products shipped to Mexico from the U.S. could lead to price increases here.
But there could be a silver lining for Mexico.
Tajonar said that Mexican ports stand to benefit if some U.S. exporters decide to reroute their shipments via Mexico.
“It’s a great opportunity for ports like Lázaro Cárdenas [in Michoacán] to increase operations,” he said.
A report by the United States Congressional Research Service said that “Texas shippers might examine rail connections to Mexican ports” given the strike by East and Gulf Coast dockworkers.
Fernando Con y Ledezma, president of the Mexican Association of Shipping Agents, said that a strike “always causes [economic] damage” and predicted that “the North American economy will be brought to a standstill” if the job action continues for a prolonged period.
International Longshoremen’s Association President Harold Daggett told CNN that if the strike goes on for a couple of months, “this world will collapse.” (ILA)
According to the Associated Press, “J.P. Morgan estimated that a strike that shuts down East and Gulf coast ports could cost the economy [US] $3.8 billion to $4.5 billion per day, with some of that recovered over time after normal operations resume.”
ILA President Harold Daggett told CNN that “if we have to be out here a month or two months, this world will collapse.”
“Go blame them [USMX]. Don’t blame me, blame them,” he said.
For its part, USMX said it is “proud of the wages and benefits” it offers its employees, and “strongly supports a collective bargaining process that allows us to fully bargain wages, benefits, technology, and ensures the safety of our workers, day-in and day-out.”
With reports from El Universal, CNN, Reuters and AP
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