Auto industry braces as Hurricane Harvey hits Texas as Category 4.

on Aug26

UPDATED: 8/26/17 8:15 am ET — adds details

Freight transportation in Texas could be severely disrupted by Hurricane Harvey — which hit the coast late Friday as a Category 4 storm — potentially delaying deliveries of finished vehicles as well as auto parts to and from plants in Mexico and the Gulf region.

The most powerful hurricane to hit Texas in more than 50 years moved slowly inland on Saturday, dumping torrential rain expected to cause catastrophic flooding after battering the coast with 130 miles per hour winds.

As dawn breaks in the region, a clearer picture will emerge of the damage wrought by Hurricane Harvey. Texas utility companies said nearly a quarter of a million customers were without power.

For more live coverage and video of the hurricane from Reuters, click here.

Harvey is the strongest storm to hit Texas, the center of the U.S. oil and gas industry, since 1961, and residents and emergency respondents were still sheltering early Saturday.

The town of Rockport, 30 miles north of the city of Corpus Christ, appeared to be one of the hardest hit, Reuters reported. Ahead of the storm’s arrival, the city’s mayor told anyone staying behind to write their names on their arms for identification purposes in case of death or injury. A high school, hotel, senior housing complex and other buildings suffered structural damage, according to emergency officials and local media. Some were being used as shelters.

The hurricane came ashore northeast of Corpus Christi late on Friday with maximum winds of 130 miles per hour. That made it a Category 4 storm on the Saffir-Simpson scale, the most powerful storm in over a decade to hit the mainland United States.

Storm weakens inland 

The storm weakened early Saturday, but was still a strong hurricane as it moved inland at about six mph, the U.S. National Hurricane Center said. 

Harvey was expected to blow across the coast and up through Louisiana for days, with forecasts for storm surges of up to 13 feet and over three feet of rain. Nearly 10 inches of rain had already fallen in a few areas in southeastern Texas, the center said. Some areas have already seen flash floods, the National Weather Service said.

As many as 6 million people were believed to be in Harvey’s path, as is the heart of America’s oil-refining operations. The storm’s impact on refineries has already pushed up gasoline prices. The U.S. Environmental Protection Agency eased rules on gasoline specifications late Friday to reduce shortages.

Automotive impact

It was too early to tell on Saturday how much the storm would impact automotive manufacturing, parts shipping and retailing in Texas. 

On Friday, the Kansas City Southern railroad, a primary transport mode for vehicles shipped to the U.S. from Mexican assembly plants, said on its website that it has suspended train operations between Kendleton and Laredo, Texas. The company warned customers to expect delays of at least two to three days as it evaluates its network for damage before resuming operations. The railroad has extra crews assigned to monitor and react to developments.

The other major cross-border railroad, Union Pacific, said it is moving rail cars in yards prone to flooding to higher elevations and has curtailed operations in the path of the storm.

Vehicle imports and exports also will be temporarily stalled at the ports of Houston and Galveston. Port Houston handled 85,600 vehicles last year. Volkswagen has a facility at the port, and third-party processor Auto Warehousing Co. handles vehicles for Fiat Chrysler Automobiles, according to its website.

Nationwide Auto Transport Inc., a small auto hauler based in Oklahoma, already has rerouted trucks out of the storm region and put shipments on hold, President Julie Delp said.

Her company operates eight trucks and primarily hauls vehicles purchased by dealers from auction houses or dealer-to-dealer trades. Vehicles bought from Manheim auction houses in San Antonio, Dallas and Houston are sitting, as are shipments in Plains states destined for Texas, she said.

Dealers prepare

Mitchell Dale, co-owner of McRee Ford in Dickinson, Texas, just south of Houston, said even though his area is under voluntary evacuation, his dealership closed before noon Friday to allow employees the opportunity to leave town.

“There’s only so much you can do,” Dale said. “Our main concern is our employees, and making sure they had time to leave if they want to.”

Dale said this is the worst storm event the dealership has seen since 1979, when a similar tropical hurricane swept more than 30 inches of water into the building.

“We were totally shut down for about two weeks,” he said. “We had to replenish inventory and it just creates a real mess.”

While flooding remains his main concern, Dale said the store recently finished a new building higher than the previous one.

The hurricane is forecast to slam first near Corpus Christi, Texas, drop flooding rains along the central Texas coast and potentially loop back over the Gulf of Mexico before hitting Houston, Reuters reported. Photo credit: Reuters

Toyota prepares

Toyota is assessing whether it will cancel the Friday night shift at its San Antonio truck plant and has already canceled its Saturday overtime shift there as a precaution. The plant has been operating the single weekend shift since March 2016 due to high demand for the Tacoma and Tundra pickup trucks.

“All team members are encouraged to prepare for the weather,” a Toyota spokesperson said Friday. “Currently there is no impact to production or logistics.”

A storm in May of last year blew a hole in the roof of the San Antonio plant and knocked out power, taking the plant off-line for several days and causing Toyota to cancel a half-dozen shifts. The factory produces about a thousand trucks per day.

Toyota’s big regional distributor, Gulf States Toyota, was putting a storm plan into place to avoid as much disruption as possible. “We are working with our suppliers and logistic partners to ensure contingency plans are in place to provide minimal impact to our customers and dealers,” the distributor said in a statement.

Volkswagen Group of America is moving vehicles away from at-risk areas at Port Houston, picking up debris and other potential hazards that can be carried by the wind, and making sure employees and service providers are out of harm’s way. The company is also expediting parts processing and shipments, both inbound and outbound, at its Fort Worth Parts Distribution Center, which services dealers in the Gulf region, spokeswoman Jeannine Ginivan said.

Nissan Motor Co. is not expecting any supply chain problems and can reroute shipments around affected areas, spokesman Parul Bajaj wrote in e-mail.

A General Motors spokesman would say only that the automaker is monitoring the situation and will respond as necessary. GM’s plant in Arlington, Texas, is a key assembly operation for large SUVs, such as the Cadillac Escalade and Chevy Suburban. 

Reuters, Jackie Charniga and Laurence Iliff contributed to this report.

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