Friday brought some good news to Honda Motor Corp. and other automakers affected by the U.S. West Coast ports labor dispute. A union of dockworkers and a group of shipping companies have reached a tentative deal, allowing auto production operations to return back to normal.
Both parties announced the agreement in a joint statement released late Friday. The deal was reached several days after U.S. President Barack Obama sent Labor Secretary Tom Perez to California to help broker a deal between the two sides. The agreement came after nine months of negotiations.
The labor dispute shut down the 29 West Coast ports and delayed shipments, hurting a number of industries. Among those affected is the auto industry. Automakers like Honda were forced to resort to air freight in order to get components for its North American assembly lines.
Last week, Honda announced that it was cutting back production at some of its North American factories due to parts shortage. Its plants in Indiana, Ohio and Ontario, Canada were scheduled to reduce output from February 16 to 23. Company spokesman Mark Morrison explained that while the automaker had used other means of transportation to minimize production disruptions, the prolonged shutdown of ports had forced them to slow output. Honda sources most of the components used in its vehicles built in North America from domestic suppliers.
Before the deal was confirmed, Honda said on Friday that it will continue to reduce production at two North American plants from February 24 to March 2 because of parts shortage. One of these is the Greensburg, Indiana factory, which builds the Honda Civic and Acura ILX. The other is the Alliston, Ontario facility which also produces the Civic along with the Honda CR-V and Acura CSX.
According to Honda, this production slowdown in both factories will cost the company 5,000 vehicles.
On Saturday, the Japanese automaker welcomed the deal. It claimed that the shipping delays cost the company 25,000 vehicles in February (loss in the period between February 16 to 23 was 20,000 units).
Morrison told Reuters that the automaker will continue using air shipments from Japan to supply parts to its North American assembly lines as port operations normalize. He also said Honda’s production operations in Ohio will resume to full capacity starting February 24.
Honda is not the only Japanese carmaker affected by the ports closure. Toyota Motor Corp. limited overtime at some facilities while Nissan Motor Corp. admitted to being affected by the dispute. Subaru also had to airlift components to maintain full production.