Honda, Subaru Airlifting Parts Over West Coast Port Labor Issues

Feb 05, 2015 04:08 PM EST | Matt Mercuro

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Automakers like Honda Motor Co. and Fuj Heavy Industries Lt., which makes Subaru vehicles, have decided to start shipping some of their auto parts to the U.S. by air due to a labor dispute with West Coast ports that is delaying important deliveries.

The two companies started the airlifts in January over concerns that stalled discussions with dockworkers and ship operators that could slow down deliveries enough that production could be affected, the companies said Thursday according to Bloomberg.

The head of the shippers' association is urging the unit to accept a new offer that includes 3 percent raises since slowdowns, which are union-led, could completely shut down the U.S. West Coast's 29 ports in five to 10 days.

Toyota has stopped overtime work at some of its North America plants due to the delays and is monitoring the "situation," Kayo Doi, a spokeswoman for the carmaker, said to Bloomberg.

Mitsuru Takahashi, chief financial officer of Subaru, said the switch to air delivery for parts could increase costs by 7 billion ($60 million) per month. Fuji Heavy raised its full-year profit forecast earlier this week, according to Bloomberg.

Honda spokesman Atsushi Ohara said this week that, so far, production hasn't been affect by the labor issue in the U.S. He couldn't say how much shipping costs will increase due to the shift to planes however.

Automakers aren't the only ones who have been affected by the slowdown at West Coast ports.

McDonald's Japan has airlifted more than 1,000 tons of French fries and imported some at ports on the U.S. East Coast in order to deal with shortages caused by the labor dispute, according to Bloomberg.

The President of the Pacific Maritime Association, James McKenna, said delays at a number of the ports are hurting manufacturers, farmers and consumers as the flow of goods approaches a "coast-wide meltdown."

McKenna is calling on the International Longshore and Warehouse Union to accept the second formal contract proposal made since negotiations began last May.

Stay tuned as more information on the labor dispute gets released. 

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