Crises Test Suppliers, Automakers

Everything from terrorism on 9/11, to severe weather and disruptions to the electric grid have rocked the auto industry in North America over the past couple of years and forced automakers to take a close look at their preparations for emergencies.

Indeed only last week, the roof of General Motors Service Parts Operation warehouse and processing plant outside Flint, Mich., collapsed under the weight of blowing snow that had created drifts an estimated 15 feet high on the plant’s roof. Fortunately, no one was hurt and GM and the plant went back into operation shortly after GM officials made an assessment of the damage to the plant.

Documenting survival

In the face of the chronic security issues, the Automotive Industry Action Group in Southfield, Mich., has developed guidelines to help companies, large and small, both survive and recover from both natural and man-made disasters.

Andy Cummins, AIAG executive director, said the document was developed AIAG at the behest of the major automakers, including the Big Three and the Japanese companies such as Toyota. The manufacturers are specifically concerned about any kind of crisis that could disrupt the flow of components and material to their assembly plants.

Surveys done by AIAG, which is a cooperative organization set up nearly 20 years to help improve communications of all kinds within the auto industry, indicate that only 30 percent of the supplier companies feeding the automotive business have disaster and recovery plans, Cummins said. The results set off alarms because of the fear that one unprepared supplier could wind up shutting down several assembly plants.

“Events such has the recent electrical blackout in Canada and the United States can have a devastating impact on North America's automotive supply chain and lead to millions of dollars in lost wages and production,” added Cummins. The blackout across the northeastern United States and Ontario probably cost automakers around $1 billion.

Terror responses

The guidelines, which are based on the experience of the security experts employed by General Motors Corp, Ford Motor Co., and DaimlerChrysler, are meant to be flexible. They stress common sense, and are heavily oriented to preparation and planning, Cummins noted. Copies of the guidelines are available at the AIAG website,

One part of the guidelines outlines the requirements for C-PAT or the United States Trade Partnership Against Terrorism, which was set up after 9/11 to help tighten up security in shipments of components that have to move across the U.S.-Canadian or U.S.-Mexican borders. The program requires companies to vouch for the cargo crossing the border is secure.

Cummins said the AIAG also is aware that the entire industry is under pressure to trim expenses and has tried to minimize the cost of setting up a crisis management program. But the expense associated with C-PAT is unavoidable given the current environment.

Richard DuFour of General Motors Global Security Staff noted that planning also can help protect employees. When a tornado struck the General Motors plant in Oklahoma City in the spring of 2003 only one person suffered a minor injury, he noted. In addition, GM also managed to put the plant back into operation relatively quickly despite the severe damage.

In fact, GM is offering the crisis management guidelines to suppliers all over the world, DuFour said.

Rolf Steffens, manager of executive operations at the Ford Motor Co., said drills and table-top type exercises where managers prepare for emergencies pay if and when disaster strikes. Ford’s truck assembly plant in Norfolk, Va., weathered a hurricane last fall with little disruption because the plant was prepared, he said.

Cameron Hill, manager of crisis management at the Chrysler Group, noted plans do have to be updated regularly to remain effective. During the power outage last summer, Chrysler officials in Auburn Hills, Michigan, discovered that phone numbers of emergency contacts were frozen in computer servers that had shut down. Now Chrysler has a hard copy of the list, which is updated regularly, Hill said.

Cummins also said a disaster plan also can turn into a recovery plan that helps the company restore operations quickly and avoids the kind of problems that put many companies out of business after a disaster.

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