A staggering 5,600 additional workers have now joined the ongoing strike, adding to the 13,000 members who initiated the strike a week ago. The new General Motors (GM) sites employ approximately 3,400 workers, with 1,600 located near Flint. On the other hand, the Stellantis sites have about 2,100 workers.
“Due to the highly integrated nature of the auto industry, shutting down one plant will inevitably lead to layoffs and shutdowns at other plants,” explained Patrick Anderson, the principal and CEO of AEG in their latest report. He further emphasized, “This includes supplier businesses, particularly those relying on a small number of contracts with the original equipment manufacturers (OEMs).”
Recently, Detroit-based seating supplier LM Manufacturing temporarily laid off 650 workers as a result of the strike, as highlighted in this report. LM Manufacturing, which is a joint venture between Canadian auto supply giant Magna International and minority-owned LAN Manufacturing, had to take this step after the strike halted the production of Ford Motor Co.’s Bronco, among other models by the Detroit 3.
While some suppliers are managing to hold on for now, the duration of the strike will likely force more suppliers to resort to mass layoffs.
It remains uncertain how the addition of 38 General Motors and Stellantis parts distribution centers on Friday will impact the ongoing UAW strike. These plants primarily support auto dealers and aftermarket parts, but they also serve as warehouses for less critical auto parts from suppliers.
With U.S. auto dealers having an average inventory of about 55 days, they are relatively shielded from immediate production impacts. However, the strike’s effect on parts distribution is expected to swiftly impact dealers’ service departments.
Nevertheless, auto suppliers will not escape the negative repercussions, as stated by Anderson.
“For Tier 1 and Tier 2 suppliers engaged with GM and Stellantis, planning for production in the upcoming weeks has now become nearly impossible,” Anderson conveyed in his statement.
A number of these suppliers, who often have contracts with slim margins tied to only a few plants, are at risk of shutting down. Unlike the UAW, they do not have access to an $825 million strike fund, nor do they have a vote in this strike. Consequently, the greatest damage is being inflicted upon the workers and owners of these firms. In fact, it has been estimated that the strike’s cost in the first week alone amounted to at least $1.6 billion. The lost wages in the following week are expected to be significantly higher.”
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