A U.S.-Mexico border shutdown would be “devastating” to American auto companies, their workers, parts suppliers and regional economies throughout the Midwest, Texas and California, industry experts said Tuesday.

“I don’t know why we’re talking about avocados & strawberries (as much as I love both), when the whole flipping auto industry could be shut down in a matter of days if we close the US-Mexico border,” tweeted Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research in Ann Arbor.

“Go back to what Michigan looked like in 2009," she told the Free Press on Tuesday. "It’s pretty dire. Everybody was laid off or idled and it was economically devastating to the state.”

Not only do parts come into the United States from Mexico, but 37% of U.S.-made parts ship to Mexico for further steps in vehicle manufacturing, Dziczek emphasized. A disruption in the supply chain risks shutting down factories and bigger production operations that can’t simply restart. It would impact hundreds of thousands of people immediately, she said.

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President Donald Trump, responding to a surge of immigrants at border seeking asylum, putting enforcement at a "breaking point," has talked in recent days of closing the U.S.-Mexico border. He acknowledged Tuesday that such a move "will have a negative effect on the economy," but said national security is "more important than trade.”

Worse than a tsunami

Jeoff Burris, founder of Plymouth-based Advanced Purchasing Dynamics, a supply chain consultant to auto suppliers primarily in North America, said the effect would exceed that of a natural disaster.

“We have seen Mexico earthquakes, coastal-labor disputes at ports of entries and tsunamis. All pale in comparison to the impact a prolonged border shutdown would have on suppliers, dealers and industry employees,” he said.

“Complex assemblies include components and raw materials that cross the border multiple times before a finished car is delivered to a dealership,” he said.

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What is imported from Mexico has increased over the years, from labor-intensive items such as wire harnesses and cut-and-sewn seat covers to almost every type of component, including engines, axles and transmissions.

“A shutdown would be disastrous for hundreds if not thousands of suppliers on both sides of the border,” Burris said. “For both economies, it would be mutually assured destruction.”

Moreover, the impact of shutting down the border would be almost immediate and would be of a magnitude that would make it difficult and expensive to develop alternatives for moving product, he said.

“While the industry has been able to work around closures of multiple ports due to labor disruptions, it has never had to deal with something on this scale. If a supplier wanted to move production back to the U.S., it would be difficult because getting machines to the U.S. would be impacted by the closure.”

Very simply, Dziczek said, a border shutdown would “crash the economy.”

“There are things that went to Mexico long ago that were highly labor intensive that, quite frankly, we don’t really want back,” she said. “Wire harnesses are highly manual work. Many companies are doing design work here and manufacturing elsewhere. Because it’s so labor intensive and not high value.”



Bringing such operations back makes little sense because wireless transmission technology will one day make the current wiring system obsolete, Dziczek said. “Why go after low-value stuff when there’s tons of high-value things coming to cars that we do want to have here in the U.S.?”

'Every freakin' car'

As an expert on parts supply who advises policy makers, she noted that 70% of wire harness imports that go into all vehicles come from Mexico, with the rest coming from Central and South America and Asia.

“This is a set of bundled wires that get laid into the vehicle in the beginning; for motorized windows, door locks, power seats, instrument panels, engine electronics, lighting,” Dziczek explained. “Everything is connected to this set of wires bundled together in a pretty manual process in Mexico. Without that, you’ve got no electricity or information flowing through your car. Cars need electricity. These things are in every freakin’ car. Every car. You can build a whole car without seats and put them in later. You can’t build a whole car without the wire harness and put it in later.”

Imagine miles of wire, which is what’s used to make the automotive wire harness. It’s bound together with little clips, connectors and terminals. These are the electrical components that are essential to auto manufacturing. And Mexico is essential.

“This is done in low-cost countries and it's not easily automated,” Dziczek said, and the part powers the windshield wipers, the door motor, the seat motor.

Closing the border “shuts down all auto manufacturing within the U.S. within a week,” she said.

Mexico isn't hostile

Analysts said they didn’t understand the rationale put forth by Trump.

A claim of a hostile nation or state-sponsored terrorism doesn’t apply, Dziczek said, because the Mexican economy is so dependent on the relationship. “Mexico is not a hostile nation. We turned. This is us saying we don’t want Mexican parts imports.”

But ripples would be felt far beyond the auto industry.

“This will impact anyone who buys anything at a supermarket, has a job in manufacturing or distribution, has a family member or loved one who works in those areas or is worried about the U.S. economy not being tipped into a recession," said economic analyst Jon Gabrielsen, who advises the auto industry and suppliers.

“One only has to be missing one part per auto assembly plant to not be able to produce that entire vehicle. The moment the auto assembly plant runs out of that part, it has to stop assembling that vehicle, closing that plant. Further, that assembly plant no longer needs the other thousands of other parts until it has that one missing part again that is stuck on the other side of the border. So the direct suppliers no longer have orders for their parts. ... The dominoes tumble rapidly."

Even a partial shutdown that slows the flow of goods across the border could be destructive to the U.S. economy, Gabrielsen said.

'This isn't just the autoworker'

Calling the Trump threat a "nuclear option," Harley Shaiken said the impact would instantly devastate both sides of the border.

"It means if your parents are laid off, it disrupts family incomes. Sales are lost in a highly competitive market," said Shaiken, a professor at the University of California-Berkeley who specializes in labor and the global economy.

"If you work in a restaurant in an auto community, you may have fewer customers as people are wondering if this is a day or a week or what’s going on. This isn’t just the autoworker," he said. "You’ve got millions of people that live in the U.S. near the border in cities like San Diego, El Paso and others. You’ve got a huge amount of cross-border legal traffic — of people who work in the other country or who have relatives in the other country and a lot of Mexicans who come to the U.S. to shop for consumer goods. All that screeches to a halt."

In the end, a border shutdown would throw the U.S. auto industry into chaos.

"It's so catastrophic, it's not going to happen," Shaiken said. "We'll see Trump doing a partial closure. That's very disruptive. The impacts are the same but it's not catastrophic."

Offering a bit of perspective, Charles Ballard, a professor of economics at Michigan State University, said, "As I see it, there is only one thing that would be worse for the industry than closing the border with Mexico, and that would be closing the border with Canada."

A new study released Tuesday from Business Roundtable in Washington, D.C., found that international trade supports one of every five jobs in Michigan, or about 1.1 million jobs.



"Trade with Canada and Mexico alone supports 338,300 jobs in Michigan," the report said. "Exports from Michigan to Canada and Mexico have increased by 107% since the implementation of the North American Free Trade Agreement."

Michigan exported $39.1 billion in goods and services to Canada and Mexico in 2017, according to the study.

Contact Phoebe Wall Howard: 313-222-6512 orphoward@freepress.com.Follow her on Twitter@phoebesaid. Read more on Ford and sign up for our autos newsletter.