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Experts are predicting that the UAW’s strike against the Detroit Three automakers could have a devastating effect on auto suppliers, but only if the walkout is prolonged.
Suppliers, who make parts for auto production, have more than $38 billion in revenue at risk if the strike expands, according to a report Tuesday, Sept. 19, by Bloomberg News.
The UAW announced Friday that 38 additional auto facilities in 20 states would be added to the strike already underway at three assembly plants.
Early on, the strike is probably not affecting most suppliers, said Matthew Cole, interim dean of the College of Business and Information Technology at Lawrence Technological University in Southfield.
“The length of time is the question,” he said.
Suppliers stand to lose 10-20% of their global revenue per week if the strike expands to include every automotive facility, Cole said.
UAW president: ‘This is a battle’ as strike expands to target parts makers
He said smaller suppliers could be hit harder, as they would be more likely to lay off employees, which would make it difficult to have the staff to maintain inventory.
Suppliers were just beginning to recover from economic challenges created by the pandemic, Cole said.
They are also dealing with inflation and investments in electric vehicle production that have not paid off yet, according to the Bloomberg News report.
A few Michigan suppliers laid off employees within days of the walkout, which began Sept. 15.
But at least one Oakland County supplier is optimistic that the strike won’t affect its business.
PureForge Inc., which makes brake rotors and pads, has a customer base outside of the Detroit Three automakers, said CEO Gordon Heidacker.
Consumers are hanging onto their current vehicles for longer periods, which means they have to replace brake components, creating a demand for the company’s products, he said.
UAW strikes spread to 38 locations in 20 states with Stellantis and GM targeted
But Heidacker, a former purchasing executive for Chrysler Corp., has worked with suppliers and knows that not all of them have the ability to diversify their customer base as PureForge has done.
He said the auto industry is “highly unpredictable” so it’s difficult to say how suppliers could be affected by the strike.
4605a198 Brake Pads PureForge, which has headquarters in Pontiac, recently moved its manufacturing operations to Troy from California.