Auto suppliers say if UAW strikes develop to extra crops, it may imply the top for a lot of

Sep 19, 2023 | blog

Pat Green is nervous. He has spent the previous two years making an attempt to rent proficient folks to fill the 2 crops in Grand Rapids operated by Cascade Die Casting Group, which makes aluminum and zinc diecasting for the automotive and equipment industries.

“We’ve got a good team now and I don’t want to lose people because it was hard to find good people,” Green, who’s CEO of the corporate, advised the Detroit Free Press, a part of the USA TODAY Network, on Monday.

Pat Green, CEO of Cascade Die Casting Group in Grand Rapids, Michigan.

Pat Green, CEO of Cascade Die Casting Group in Grand Rapids, Michigan.

That’s why on the fourth day of a historic United Auto Workers strike towards the Detroit Three automakers, Green was intensely planning for methods to experience it out with out having to put off employees if the strike grows and stretches into weeks. He has good cause for planning. On Monday night time, UAW President Shawn Fain introduced a brand new strike deadline of this Friday at midday. If Ford Motor Co., General Motors or Stellantis haven’t made substantial progress towards an settlement with the UAW by that point, Fain will develop the Stand Up Strike to extra crops.

‘If not now, when?’ Here’s why the UAW strike might have come on the excellent time for labor

For Green’s half, if that occurs, he’ll begin by ending extra time on the firm after which he’ll ask for volunteers to take a while off with a lowered pay plan. It’s one thing he began considering late final week.

The UAW’s strike began at 11:59 p.m. Thursday when practically 13,000 UAW employees throughout the three Detroit automakers walked out of three crops as a part of the primary wave of shutdowns till a brand new labor settlement is reached. Those crops are Ford Michigan Assembly Plant (Final Assembly and Paint solely) in Wayne, Stellantis Toledo Assembly Complex in Ohio and GM’s Wentzville Assembly in Missouri.

UAW Strikers slow a truck from entering the Ford Michigan Assembly Plant in Wayne on Monday, Sept. 18, 2023.

UAW Strikers gradual a truck from coming into the Ford Michigan Assembly Plant in Wayne on Monday, Sept. 18, 2023.

If the union and the automakers cannot attain a tentative settlement, in some unspecified time in the future the UAW has stated it plans to strike extra crops throughout the three firms. A broader and extended strike would imply components suppliers could not hold manufacturing going if the automobile meeting crops that use their components are idled. No one is certain of simply how lengthy suppliers may maintain out.

See the picket traces: UAW launches a strike, focusing on three Detroit automakers

“We’re in better shape than most, but if others in the supply chain go down, we’ve got another crisis on our hands just like the chips crisis,” Green stated, referring to a current scarcity of semiconductor chips that crippled the business. “If this stretches out to five or six weeks, there’s going to be real problems in the supply chain. And I could be wrong; it could be shorter than that.”

The first fallout

The Biden administration has been preparing to offer emergency economic aid to auto suppliers to mitigate any long-term damage caused by a prolonged strike, according to published reports.

But the strike has already had some impact. A component maker in Michigan, CIE Newcor, warned it may have to lay off 293 people.

German-based supplier ZF said that it has already had to lay off some workers at various sites, including in Michigan, said Tony Sapienza, ZF North America, Inc.’s head of communications. ZF supplies components for all the vehicles made at the three plants targeted so far in the strike, including the hybrid transmission to the Jeep Wrangler 4xe hybrid made at the Toledo facility.

Sapienza declined to say which of ZF’s facilities have been affected or how many people ZF has laid off. ZF, which has North American offices in Northville, employs 11,000 people at five manufacturing sites and four technology centers in Michigan.

“The influence was fast; we’ve needed to gradual manufacturing in a few areas,” Sapienza told the Free Press. “If the strike have been to broaden or final something longer than one or two weeks, that may be a disaster for the availability chain. I’d be actually involved with tier 2 and tier 3 and their capacity to remain solvent.”

Sapienza stated an even bigger and extended strike “would hurt” his firm, however due to its measurement, it could be OK.

But “every plant that goes offline creates additional stress in the supply chain, and we really hope our customers and the UAW are taking this into consideration,” Sapienza said.

U.S. Steel said Monday it is temporarily idling furnace B at the Granite City steel plant in Illinois as a “risk mitigation” in response to the UAW strike. The company said it is evaluating how many of its 1,450 employees there will be affected.

Keeping an eye on Unifor, too

All of this news comes as the UAW’s counterpart in Canada, Unifor, is negotiating a new contract with Detroit automakers as well. Its current contract was slated to expire at 11:59 p.m. Monday. But in the early hours Tuesday morning, Unifor said it would keep talking with Ford, after the automaker made a “substantive offer” on a brand new labor contract as the previous deal expired. Unifor is extending negotiations for a 24-hour interval.

Unlike the UAW, Unifor is following custom and has chosen a target company — Ford — to negotiate a deal with first. It would use that agreement as a template for contracts with the other two. In the U.S., the UAW is negotiating with all three automakers separately, but simultaneously.

Around 4 p.m. Monday, Unifor National President Lana Payne said there was still no tentative agreement with Ford.

“While we stay on the desk the probability of a strike will increase with every passing hour,” Payne said, adding that the union has advised more than 5,600 members at Ford facilities in Canada to prepare for all scenarios, including a strike.

After Ford’s eleventh-hour “substantive supply,” Unifor said it would negotiate through the night, but members should continue to maintain strike readiness.

If Unifor does not get a tentative agreement and strikes in solidarity with the UAW, that will be a double whammy for parts suppliers.

“These are not normal times,” Sapienza stated. “We’re coming off of three years of stress on the supply chain and so we’re already in a fragile state. We’re keeping an eye on Unifor, for sure. … There’s only so much more stress the system can take.”

Layoffs could go into the thousands

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.

Joe Petrillo, director of business development and advanced engineering at Meridian Lightweight Technologies in Plymouth, said the company is a global supplier of lightweight cast metal parts to many automakers including the Detroit Three. So the strike is a concern because of the interconnection of the supply chain from the tier 1 suppliers — those that supply parts directly to the carmakers — down to the smaller tier 2 and tier 3 suppliers, those who supply components to the tier 1 group.

“We are monitoring the occasions and checking in with our suppliers and prospects,” Petrillo said. “In our view, an escalation of occasions that results in a chronic strike that presumably idles all of the Detroit Three (manufacturing) crops, might show to be the final Jenga block on a provide base that has been confused to the max, having to beat COVID shutdowns, ‘stop-and-go manufacturing’ because of chip and half shortages, whereas nonetheless making an attempt to work its approach by way of a constrained manufacturing labor market.”

Alicia Carter of Westland strikers outside of the Ford Michigan Assembly Plant in Wayne on Monday, Sept. 18, 2023.

Alicia Carter of Westland strikers outside of the Ford Michigan Assembly Plant in Wayne on Monday, Sept. 18, 2023.

Glenn Stevens, executive director of MICHauto, the group that advocates for the statewide automotive industry, said he has been talking to suppliers for a couple months and they have all been preparing for a strike scenario for some time.

“Some much more proactively than others, but nobody was flying blind anticipating that there might not be a work stoppage,” Stevens said.

There are about 1,000 supplier facilities in Michigan, he said, noting that 96 of the top 100 suppliers to the North American auto market either have their headquarters or a facility in Michigan. So if the strike expands to other automaker plants and lasts into weeks, the job layoffs could reach into tens of thousands.

“You have the direct employment and you’ve got the multiplier have an effect on of every of the automotive jobs and that’s between six to 10 folks for each one automaker job, so it’s substantial,” Stevens said. “This is the biggest business in our economic system. It has an financial contribution of over $300 billion yearly to the state of Michigan.

The potential influence

The bigger suppliers are seemingly extra protected than the smaller ones from strike fallout, stated Laurie Harbour, CEO of Harbour Results, Inc. That’s as a result of they typically produce other prospects from different industries to maintain enterprise going. They can transfer folks round and alter up schedules to keep away from huge layoffs.

Laurie Harbour, CEO of Harbour Results, Inc.

Laurie Harbour, CEO of Harbour Results, Inc.

“I talked to several companies last Friday and most said little to no impact yet,” Harbour stated. “Any one program, which is what you’re looking at with the (automakers), is not going to create massive layoffs but come tomorrow or the next day if (UAW’s Fain) closes more plants and we get to a significant product like the (Ford) F-150 pickup, then you’re going to see more layoffs.”

Because the gross sales quantity of the F-150 is so essential, if the union have been to strike the crops that construct Ford’s massive vendor, “you’ll see thousands of layoffs because you have so many supplier plants and sub-suppliers,” Harbour stated.

“The fact that it’s happening in this spotty fashion is actually better for the supplier community,” Harbour stated. “But every day or week that goes by you could see more and more layoffs.”

Big auto suppliers react

At big tier 1 auto provider Magna International, leaders are carefully monitoring the scenario, stated Dave Niemiec, Magna spokesman. The firm has about 12,450 workers in Michigan. Niemiec stated it’s untimely to touch upon any particular influence the strike might have on its operations.

“However, we have focused considerable attention on contingency planning to proactively address any temporary business disruptions to our operations,” Niemiec stated. “If that time comes, we are prepared in terms of temporarily scaling back production on affected programs as efficiently as possible, while being equally prepared to ramp up quickly when ready. In the meantime, we remain hopeful that the parties will be able to reach amicable agreements and the disruption and potential impact will be minimal.”

When requested of any influence from the strike on Lear, spokesman Brian Corbett stated, “At this time, we’re not commenting on the UAW strike.”

Auto supplier ZF's North American headquarters in Northville, Michigan.

Auto provider ZF’s North American headquarters in Northville, Michigan.

‘We must take motion’

Harbour stated most suppliers she’s talked to are ready or at the least forming plans if the strike grows that embody contemplating the best way to successfully hold producing, make scheduling modifications to their shifts and have layoff methods in place, even providing supplemental pay as much as 70% of employees’ salaries if they’re laid off.

“Those are the ones who are financially strong and don’t want to lose their people,” Harbour stated. “It’s a daily challenge and you’ll evaluate everything every day: What is my forecast? What can I deliver to my customer? And run a little bit of inventory so that when the spigot comes back on, I have parts and ready to go.”

At Cascade Die Casting Group, Green stated the corporate makes components for the Detroit Three’s SUVs and pickups. For instance, it makes components for the Jeep Grand Cherokee that Stellantis builds on the Mack Avenue Assembly Plant in Detroit. If the UAW strikes that plant or any of the crops that make the Detroit Three’s heavy obligation pickups, Green must be prepared.

Contact Jamie L. LaReau: Follow her on X, previously Twitter: @jlareauan.

This article initially appeared on Detroit Free Press: UAW strikes: Auto suppliers warn of closures if extra crops concerned

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