Posts Tagged ‘General Motors’

Computer Chip Shortage has Auto Traffic Lagging

October 10, 2021

If it seems that you are seeing fewer auto rack cars these days it is not your imagination.

U.S. automakers have curtailed production of cars and trucks due to a shortage of computer chips.

That has meant that some assembly plants have been idled. General Motors has temporarily shut down nearly all of its North American assembly plants and Ford temporarily halted output at its Kansas City assembly plant where it builds F-150 pickup trucks.

The microchip shortage is rooted in the effects of the COVID-19 pandemic.

Historically, automakers have ordered microchips on a “just in time” basis.

When the pandemic intensified in March 2020 automakers closed assembly plants for health and safety reasons and stopped buying microchips.

Once production resumed, automakers didn’t have a large supply of chips on hand. At the same time, chip makers had been inundated by the demand for semiconductors used in computers and games consoles.

Chip makers, who are located overseas, have struggled since then to match production with demand.

Looking to the weekly and month freight volume reports released by the Association of American Railroads shows at first glance a seemingly growing auto traffic picture.

Thus far in 2021, railroads have moved 490,870 carloads of motor vehicles and parts, a 5.6 percent increase compared with 2020 volumes during that same time period.

In the second quarter of this year, railroads played up double and even triple digit gains in auto traffic compared with the second quarter of 2020.

But this comparison is misleading because 2020 figures reflect the widespread shutdowns in the auto industry during the depths of the pandemic between March and May.

A closer review of traffic data shows that 2021 figures lag behind those for 2019 in the same time periods.

Of late the weekly AAR statistics are showing auto traffic on the railroads trailing the same weeks in 2020.

For example, in the week ending Sept. 25, railroads handled nearly a third fewer carloads of auto traffic than in the same week in 2020.

U.S. railroads hauled 447,000 GM vehicles in the third quarter but that was down more than 218,000 vehicles compared with the same period last year.

Automakers say their sales have been less in recent weeks than what they had in the same period in 2020.

Nissan said its third quarter sales were down 10 percent to 198,955 from 221,150 vehicles in 2020. Honda reported a near 11 percent decline in car and truck sales.

Class 1 railroads will release third quarter financial reports later this month and those should provide a more accurate gauge of the health of auto traffic by rail.

Wabtec, GM to Develop Loco Power Systems

June 16, 2021

Pittsburgh-based Wabetc has signed a memorandum of understanding with General Motors to work to develop a battery for use on Wabtec locomotives.

The two companies plan to work to develop GM’s Ultium battery technology and Hydrotec hydrogen fuel cell systems.

The systems would be used in Wabtec’s  FLXdrive battery-electric locomotive. A prototype of the unit recently tested on BNSF in California.

In a statement, Wabtec said “by working with GM on Ultium battery and Hydrotec hydrogen fuel cell technologies, we can accelerate the rail industry’s path to decarbonization and pathway to zero-emission locomotives by leveraging these two important propulsion technologies.”

Wabtec said the collaboration will enable Wabtec to take advantage of technology already under development for a variety of highway uses.

GM is constructing battery cell plants in Ohio and Tennessee in a joint venture with LG Energy Solutions, and will manufacture its hydrogen fuel cells in a joint venture with Honda at a plant in Brownstown, Michigan.

U.S. Railroads Expect to Benefit From Increase in Auto Maker Manufacturing Capacity in Mexico

March 10, 2016

With U.S. auto makers seen as likely to increase vehicle production in Mexico and that is likely to be good news for U.S. railroads.

Although many of those vehicles will be built for export markets that do not include the United States and Canada, analysts expect U.S. railroads to see increased traffic in parts used to make vehicles as well as the finished vehicles.

Larry Gross, who is president of his own consulting business, told Trains magazine that a substantial number of the vehicles being built in Mexico are expected to move north by rail.

train image2Railroads also could benefit from hauling parts destined for the Mexican assembly plants.

Although this might seem to be a boost for railroad intermodal business, Gross said the complication is that moving the parts would involve two railroads working together which often do not work well together.

Nonetheless, some agreements have been worked out, including one involving BNSF and Ferromex (Ferrocarril Mexicano, FXE) to move auto parts in containers between Chicago via El Paso, Texas, to an assembly plants near Mexico City at which Volkswagen builds engines and General Motors assembles engines, transmissions and Chevrolet and GMC pickup trucks.

The latest figures, which are from 2014, show that $73.5 billion in exports and imports moved by rail from Mexico to the United States.

Most of this traffic – more than half of which was vehicles and parts – was interchanged at gateways in Nogales, Arizona; Lardeo, Texas; and El Paso.

The statistics show that trucks handled about six times the business handled by railroads.

Trucks are not the only competitor for the railroads. “There is potential competition from ocean movement of vehicles, particularly into the East Coast,” Gross said. “How smoothly rail can flow across the border will be a key factor.”

Mexico is the third largest U.S. trading partner behind China and Canada. Auto production in Mexico began to accelerate after the 1992 adoption of the North American Free Trade Agreement.

Auto analyst Jim Gillette said that auto production in Mexico is expected to soon reach three million vehicles per year.

Auto makers are eyeing markets in South American and Europe for the vehicles they build in Mexico.

The Wall Street Journal recently reported that Ford Motor Company plans to open a new assembly plant in the Mexican state of San Luís Potosí in 2018 that combined with an existing factory near Mexico City would have a production capacity for 500,000 more vehicles annually.

The WSJ report said that three-quarters of Ford’s production would still be in the United States. More than a year ago General Motors said it would double its manufacturing capacity in Mexico.

A wide range of brands, including Fiat, Lincoln and BMW, are built in central Mexico.

Lower labor costs are often cited for moving production south of the border, but U.S. companies have also said that the quality of the work of the Mexican assembly plants has met and sometimes exceeded domestic U.S. quality standards.

A Detroit Free Press report said that despite the increase in production in Mexico about two-thirds of new vehicles built in North America will be assembled in the United States.

The report said that the rise in production in Mexico is expected to come at the expense of auto manufacturing in Canada.