Auto suppliers are beginning to feel the pinch from the six-day-old United Auto Workers strike at the “Big Three” car makers in the Midwest, according to the Detroit Free Press.
What’s going on: Companies that sell parts to Ford, General Motors and Stellantis are making contingency plans in the event the union and automakers fail to come to a labor agreement by the UAW’s new deadline of Friday at noon.
- UAW president Shawn Fain has vowed to expand the strike—which began when he called for a walkout of employees at plants in Michigan, Ohio and Missouri following a breakdown in negotiations—if there is no deal in place by then.
- Nearly 13,000 auto workers left their posts and are now on the picket lines.
Why it’s important: “The state of the supply chain is delicate. That’s because it has had to recover from the COVID-19 pandemic, which shut down the industry for eight weeks, then suppliers faced a massive shortage of semiconductor chips used in a variety of car parts. Since early last year, many suppliers have struggled to hire and retain workers.”
- For at least one company, a Michigan diecasting manufacturer, an expanded strike will mean at the very least “ending overtime pay at the company and [a request] for volunteers to take some time off with a reduced pay plan.”
- U.S. Steel said this week it will temporarily idle one of the furnaces at its Granite City, Illinois, steel plant in response to the strike.
- Other suppliers have already begun taking austerity measures. One said it had laid off workers at several of its sites and had begun “to slow production in a couple of areas.”
Smaller suppliers, bigger impact: Smaller companies are more at risk of financial hardship (and even closure) from a lengthy strike because unlike their larger peers, they don’t have other customers from unaffected industries to keep them afloat, a source told the Free Press.
The NAM says: “With a protracted strike, no one wins,” said NAM Vice President of Economic Policy Brandon Farris. “Employees and manufactures of all sizes are already feeling the effects, which will be magnified the longer the strike lasts. Some businesses may never recover from a long strike, and our supply chains may continue to be thrown into turmoil. The NAM urges a swift resolution.”