Lengthening UAW-GM strikes weighs on suppliers, sparking layoffs

Ian Thibodeau
The Detroit News

The United Auto Workers strike against General Motors Co. is sending shock waves through the North American automotive supply chain.

By Wednesday, the tenth day of the union's national strike against the automaker, thousands of non-UAW employees had been temporarily laid off at automotive suppliers, trucking companies and other GM affiliates. And the strike is costing those companies hundreds of thousands in lost revenue that will be harder to make up as plants, trucks and employees sit idle while 46,000 UAW-GM employees strike 55 GM facilities around the United States.

"The longer it goes on, the harder it is to make up lost output," said Kristin Dziczek, vice president of industry, labor and economics at Ann Arbor's Center for Automotive Research. "You can't overtime your way out of a big hole. The more time it goes on, it kind of snowballs."

The UAW strike has cost automotive suppliers, trucking companies and other GM affiliates hundreds of thousands in lost revenue as plants, trucks and employees sit idle. Above, a striking plant worker blocks the passage of a truck outside the GM assembly plant in Bowling Green, Ky, Monday.

Beyond the direct damage to the automaker, the UAW and its GM members are the collateral hits to the company's supply base, its vendors and transportation companies as the economic shock waves reach deeper into communities and companies accustomed seeing GM dollars flow through their accounts. In a strike, much of that cash ceases to flow.

While GM has had to temporarily lay off more than 2,000 employees at Canadian plants and an engine facility in Ohio that isn't represented by the UAW, suppliers like Magna International Inc. have had "sporadic temporary layoffs" throughout the U.S. and Canada.

The supplier has been able to offer training or conduct maintenance at some plants to "mitigate" downtime, Magna spokeswoman Tracy Fuerst said, but some plants have turned to short-term temporary layoffs on GM-specific programs or assembly lines. She declined to discuss the percentage of Magna workforce that has been laid off. 

"We are continuing to monitor the situation," she said. "We remain hopeful for a quick resolution."

They're not alone. As of Tuesday evening, the ninth day of the nationwide strike, UAW officials and GM negotiators had yet to begin the round-the-clock negotiations that typically precede a tentative agreement. It was also unclear whether a tentative agreement would end the strike, or whether line workers would return to assembly lines only after a tentative agreement had been ratified by membership.

Meantime, suppliers have to wait — and lose money. Analysts have said the strike could cost GM production of 43,000 vehicles per week. Others estimate the automaker would hemorrhage $50 million or more per day as the strike halts GM from producing any vehicles in the U.S., eventually slowing production in North American plants as supply of engines and transmissions dwindled. 

The strike didn't start to reverberate through the supply chain until the fourth or fifth day of the strike. Rough estimates from 2013 indicate every job in a GM factory represents another four to five jobs in "intermediate" companies from which GM purchases goods or services to support its vehicle production and distribution. GM was likely still working with most of those suppliers during the first week of the strike to continue building inventory.

"GM kept their book of business for a little while," Dziczek said. "They didn't know how long the strike would last. After a week, that's when it really starts to roll through the supply chain."

Some suppliers are saved by product diversity. As GM plants sit idle, others — including those owned by Ford Motor Co. and Fiat Chrysler Automobiles NV — continue to crank out product. Some suppliers, like Japan-based Denso Corp., have been able to weather the GM slowdown because of that, according to spokesman Andrew Rickerman.

"Denso continues to produce products based on its customer release schedules, including GM's," he said. "We have a robust and diverse customer portfolio, so we have no intention of laying off employees in response to the strike. We hope for an amenable resolution soon."

Auburn Hills-based Continental AG has not "experienced any significant impact" to production due to the strike, spokeswoman Mary Arraf said Tuesday. But others aren't holding up as well.

Nexteer Automotive, also based in Auburn Hills, laid off an unspecified number of employees last week because GM didn't need Nexteer parts for its trucks. Phoenix Transit and Logistics President Wael Tlaib learned Sept. 18 that GM wouldn't need his trucks to transport supplies to various plants.

Even as GM recently obtained restraining orders to prevent striking UAW members from blocking trucks' access to plants around the U.S., Tlaib was forced to lay off 55 drivers at his company until GM needs parts again. One of those drivers has since quit. Tlaib told The Detroit News last week that the delivery halt costs him roughly $1,000 per truck, per day. He has 100 trucks in his fleet.

Each supplier is expected to take different steps to adjust amid the strike, which has no clear end. It's now the longest strike by the UAW in more than a decade, and there are few signs the bargainers are intensifying the pace of talks to reach a tentative agreement to be put before members for ratification.

"If the strike continues, the vast majority of North American supplier plants that ship products to GM-UAW plants will need to adjust their production schedules," Julie Fream, CEO of the Original Equipment Suppliers Association, said in a statement. "For most suppliers, laying off workers would be a last resort, particularly in this time of low unemployment."


Twitter: @Ian_Thibodeau