Following the collapse of Baltimore's Francis Scott Key Bridge, automakers must navigate a possible disruption to their supply chain. Baltimore is a key US port for automotive imports and exports. Alliance for Automotive Innovation CEO and President John Bozzella joins Market Domination Overtime to discuss how the industry will be impacted.
Bozella claims Baltimore is the top port for automotive imports and exports of parts and vehicles. There is "no question there's gonna be some impact on the industry, what we don't know is the extent of the impact," he says.
Certain automakers — such as Mercedes Benz (MBG.DE), Mazda (MZDAY), and Subaru (FUJHY) — will be exposed more than others, Bozella explains. The Automotive Innovation CEO adds that the federal government is closely engaged in the issue, with Secretary of Transportation Pete Buttigieg to host a meeting on Thursday with key industry players to develop possible workarounds.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination Overtime.
Editor's Note: This article was written by Gabriel Roy.
Video Transcript
JARED BLIKRE: Automakers are working to navigate supply chain disruptions in Baltimore following the collapse of the Francis Scott Key Bridge. Baltimore is a key US port for vehicle imports and exports. And this leaves the auto industry in search of alternative routes.
Now, let's get now-- excuse me, let's get down to John Bozzella, the Alliance for Automotive Innovation CEO and President with more on this. John, thank you for joining us here today. Just your big picture overview of the situation and what it's going to take to get back to normal here.
JOHN BOZZELLA: Yeah, first, let me just say this is an awful tragedy. And our sympathies are with the missing and the injured. And we hope for a fast recovery.
This port Baltimore is the largest, the number one automotive port in the country. So there's no question there's going to be some impact on the auto industry. What we don't know is the extent of the impact. But if you look at it, this is a significant import and export for both parts and vehicles.
JOSH LIPTON: And John, are there certain automakers who are going to be more exposed here than others?
JOHN BOZZELLA: Yeah, that's exactly right. Not everybody comes in and out of the same places. And we're looking at that now.
But I think you can expect companies like maybe Mercedes Benz, Mazda, Subaru, Stellantis to have a little bit more impact. Ford Motor Company exports a lot from the Port of Baltimore. So we're working through that now.
As importantly or more importantly, I think the federal government is working through that as well. We're engaged with the Department of Transportation, Secretary Buttigieg, as well as the White House. They want to understand that because they want to see how they can help with workarounds and other ways to manage so that supply can continue to move through the port.
JARED BLIKRE: This brings up the question of infrastructure. There was been a huge push over the last few years to get the US infrastructure up to par. Arguably, this example of an accident is separate from that issue.
But it does bring it to mind here. Just wondering what is the US need to do in terms of its infrastructure for vehicles? And I'm thinking EV here to bring us not only up to speed with the world, but for our needs in 10, 20 years.
JOHN BOZZELLA: Yeah, there's no question that infrastructure is critical. And there's really three types of infrastructure. There's the basic infrastructure that we think about when we first use the word. There's roads, and bridges, and tunnels, and all of those things that are necessary not only for us to move around, but for parts, and vehicles, and other goods to move.
There is also the smart infrastructure necessary for connected and automated vehicles. And then, of course, there's the charging infrastructure required for EVs. This is critical because automakers are invested heavily in the EV future.
And so developing charging infrastructure is absolutely critical. There is a good down payment from the federal government in the bipartisan infrastructure bill on charging infrastructure. But right now, EV sales are ahead of charging infrastructure.
JOSH LIPTON: Let me ask you, John. With the situation in Baltimore, I'm just curious, have you been talking to the Biden administration? And what are they saying.
JOHN BOZZELLA: Yes, absolutely. One of the things we find is they talk a lot to us about lots of different auto industry issues. But this was an almost an immediate phone call. And so they wanted to understand similar questions to the ones you're asking. Who's impacted the most? What can we do about it?
There's going to be a meeting tomorrow that Secretary Buttigieg will host with key players in the industry and others to try and work through this. So there immediate sort of engagement and request was, all right, what do we need to do to help? Because they recognize, look, if you look back to the pandemic, supply chain challenges in the past have really had a significant impact on the economy. Because the auto industry is 5% of GDP.
JARED BLIKRE: I'm wondering. Sometimes when there is a national problem or crisis, when we get to fixing it we say, well, we can do a little bit more. We can kind of throw this and there. Are there discussions? And especially since this is an election year of side projects to get federal funds to do a number of things, not just fix this one particular bridge.
JOHN BOZZELLA: Yeah, so, look, that's probably more of a question for the Department of Transportation and the policymakers in Washington DC. As I mentioned, a minute ago, Congress and the Biden administration passed and signed into law, a massive bipartisan infrastructure bill a couple of years ago. And so there's no question that there's already an effort right now to double down on infrastructure investments both typical basic infrastructure, as well as smart infrastructure.
JOSH LIPTON: I'm curious. Are you worried the Auto Show this week as well? With the situation in Baltimore, how top of mind was that? What were people talking about?
JOHN BOZZELLA: It was a big, big part of the conversation. There was an auto forum for the financial community and auto executives yesterday. And that was the very first question, hey, what do you think's going to happen in Baltimore?
It's fresh on people's minds. People are trying to understand the impact. To what degree? How deep will this go?
To what degree will we see disruptions? Will it have an impact on prices in the market? Those are the big questions.
JARED BLIKRE: You mentioned the Auto Show. What's one thing that's really piquing your interest there. Just get away from the previous discussion. What is exciting about the automotive industry now?
JOHN BOZZELLA: Yeah, so it's tech convergence. So this convergence of electrification and connectivity. So the vehicle's digital, it's a rolling computer.
And so that combination of clean propulsion and connectivity is super exciting. And you see it in products in the marketplace today. Products announced at the show. So it's an exciting time to be in the industry.
JOSH LIPTON: All right, John. Thanks so much for joining us today. Appreciate it.