A labor strike in Mexico forced Ford Motor Co. to build Mustang cars and Explorer SUVs with temporary steering wheels and hold thousands of the vehicles in nearby parking lots awaiting parts, the Free Press has learned.

While waiting, Ford sent approximately 3,200 factory workers home for two weeks of unplanned down time at the Flat Rock Assembly Plant south of Detroit, the company confirmed Monday.

In addition, workers at the Oakville Assembly Plant in Ontario were sent home for three days while waiting for parts to install in the Ford Flex and Lincoln Nautilus.

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The highly lucrative Ford F-Series pickup franchise was not affected.

The disruption follows a promise by Mexico's new president to dramatically increase pay, prompting strikes by workers until the promise was fulfilled.

As of Monday, Ford employees confirmed that the supply of steering wheels had resumed. At 6 p.m. Monday, Ford planned to inform its Flat Rock UAW workers that they would remain on two shifts for two weeks in April to make up for lost production.

“We had a parts shortage due to a supplier issue,” confirmed Ford spokeswoman Kelli Felker. “It affected Flat Rock and Mustang, specifically. The Explorer was affected and we did continue to build. We did not take down time at the Chicago Assembly Plant. We will be upfitting those vehicles affected by the (parts) shortage, just like Mustang.”

While hourly factory workers had scheduled down time for the week of Jan. 21, that was unexpectedly extended to include the weeks of Jan. 28 and Feb. 4.

8,000 Mustangs

Ford acknowledged the supply disruption after being asked about a memo to Flat Rock Assembly Plant workers from plant manager Jon Gifford.

The internal memo dated Feb. 13, 2019, said:

“It has come to my attention that there are rumors circulating in regards to the current and future state of the plant as it relates to Mustang production and a recent supplier issue with steering wheels.

"To offer some clarity on this situation, our steering wheel supplier is experiencing production issues that ultimately resulted in the recent down-weeks at the plant. Originally the plan was to provide the supplier with enough time to bring their inventories up to proper levels to prevent the situation we are currently in. Unfortunately, their struggles have continued, and in our current position, we must produce Mustangs with temporary steering wheels.

"We are monitoring the supplier's progress on a daily basis, but it is highly likely we will be running Mustangs with temporary steering wheels for the next few weeks. As a result of continuing production, we will be parking approximately 8,000 Mustangs until the correct steering wheels are received and installed. There will not be any additional down weeks."

Hourly workers receive approximately 75 to 80 percent of their take-home pay during down time, based on UAW contracts.

Felker declined to say how many Ford vehicles have been affected by the parts disruption. She declined to confirm the name of the parts supplier, saying it is policy not to discuss supplier agreements.

“The situation is resolved,” Felker told the Free Press on Monday. “Parts are flowing.”

She then issued the following written statement: “Earlier this year, Flat Rock Assembly Plant took several weeks of down time due to a parts shortage. In order to ensure we have enough Mustangs to match customer demand, we extended the two-shift operation for two weeks. The plant will now go to a one-shift operation after April 15.”

Ford returned to the normal production schedule on Feb. 11 without the missing parts, Felker said.

“We’re on a two-shift operation through April 15 now, then we’ll take a down week on April 15, which was already scheduled, and then we’ll come back to a one-shift operation,” she explained.

Ford previously announced that Flat Rock was reducing shifts on April 1.

Mexican labor dispute

Ford is not the only company that buys car parts from Mexico. And while the Ford memo did not mention the strikes in Mexico, a cross-referencing of data points to Mexico as the culprit.

Global supply companies have built manufacturing plants in Matamoros, Mexico, and other cities to produce car parts including air bags, seat belts and steering wheels for the North American market.

For example, Autoliv, the multibillion-dollar automotive safety systems company headquartered in Sweden, has plants in Mexico that make products including steering wheels. A company presentation in 2017 said it supplies Ford, Chrysler, Mercedes, Volvo, Mazda, Honda, Toyota and BMW. Previous customer lists included General Motors, Hyundai, Nissan, Mitsubishi and Volkswagen.

On Feb. 18, Bloomberg reported that groups have called on new Mexican President Andres Manuel Lopez Obrador to intervene in dozens of wildcat strikes affecting everything from Coca-Cola to auto parts. Lopez Obrador, who took office in December, had promised a doubling of the minimum wage in areas bordering the United States. A doubling would increase the minimum wage to about $9.25 per day (176.20 pesos).

A post from labor law firm Littler Mendelson said that workers were angered when the government's official decree of the wage increase was only 5 percent, designating the remaining amount as an “independent recuperation amount.”

Thousands of workers walked off their jobs, demanding safer conditions, a 20-percent pay hike and a one-time $1,662 bonus (32,000 pesos), The Guardian reported on Feb. 17.

“These strikes underscore how highly integrated the supply lines are,” Harley Shaiken, a professor at the University of California-Berkeley who specializes in labor and the global economy, told the Free Press. “Most customers prefer steering wheels, so when you get this kind of disruption, it can paralyze production across North America. “

He added, “If you have labor unrest in Mexico, it impacts the U.S. And you have unrest now because you’ve had suppressed wages for decades.”

Issue in UAW talks

This issue is likely to be an issue in the upcoming UAW contract talks that begin in Detroit later this year, he said.

“This disruption raises the issue of sourcing. And this will absolutely become an issue once the North American Free Trade Agreement is debated in Congress, and that’s fairly close.”

Companies worldwide look to Mexico as a low-cost labor region that can easily and efficiently ship finished components throughout the U.S. and Canada, said Jeoff Burris, founder of Plymouth-based Advanced Purchasing Dynamics, a supply chain consultant to auto suppliers primarily in North America.

“Mexico has a long history of being very stable and dependable. One blemish like this, if resolved quickly, will not hurt their reputation. But if there are others, purchasing organizations will start to take a hard look at the risks associated with sourcing to Mexico,” he said. “Automotive companies deal with supply chain issues on a daily basis. But when it gets to be 8,000 vehicles that’s affected, well, that’s a significant number and it pops on the radar.”

Retrofitting parts isn’t as significant as coping with a transmission issue, said Burris, who once oversaw global responsibilities for purchasing brakes, steering and suspensions at Ford. “The practice of parking vehicles is a frequent occurrence. I wouldn’t view it as a major concern from a safety perspective.”

He added: “It’s not routine for Mexico to have labor disruptions that upset the making of vehicles. Unions in Mexico have historically been structured slightly different than they are in the U.S. They’re more friendly to management and seem to understand the impacts of strikes,” Burris said.

“My concern is the new Mexico administration has kind of unleashed a genie in a bottle. They’ve built a huge amount of expectations. Those expectations are similar to what happened in the U.S. in the 1960s and '70s, when strikes were very prevalent in the automotive industry. That’s the thing I look at."

Contact Phoebe Wall Howard: 313-222-6512 or phoward@freepress.com. Follow her on Twitter: @phoebesaid

