Auto suppliers prepare for layoffs if UAW strikes continue
John Walsh, president and CEO of the Michigan Manufacturers Association, said OEMs and their supply chain have been building up inventory to hedge against a strike for a few months. Supplier giants such as Lear, BorgWarner Inc. and Adient plc have been bracing for the disruption for at least a month as UAW President Shawn Fain ratcheted up the tension.
If each of the Detroit 3 went down completely, it would cost Lear about $140 million of revenue a week, according to executive comments made in its most recent earnings call. In that same scenario, it would cost Adient $80 million to $100 million a week, while BorgWarner said its North American exposure to the Detroit 3 amounts to a little less than $250 million per month.
Lear declined to comment Friday. Neither Adient nor BorgWarner responded to requests for comment.
Executives at Canadian supplier Magna International, which has a large presence in metro Detroit, are closely monitoring the strike, said spokeswoman Tracy Fuerst.
“We have focused considerable attention on contingency planning to proactively address any temporary business disruptions to our operations,” Fuerst said in an email. “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.”
She declined to detail specific impacts on the company’s operations but said it “remain(s) hopeful that the parties will be able to reach amicable agreements and the disruption and potential impact will be minimal.”
Walsh said the strike will have ripple effects on Michigan’s economy, which is steeped in automotive.
“Shutting down any one part reverberates through the smallest and largest manufacturers, rather quickly.,” Walsh said in an email. “We are aware that the OEMs and their supply chain have been building up some inventory in anticipation of a strike for a few months. We are not aware of layoff plans with any degree of specificity, but certainly expect that layoffs throughout the supply chain are absolutely likely if a strike, rather limited or broad, continues.”
Dardas said he hopes the disruption passes quickly because smaller suppliers are not guaranteed to weather the storm.
“We’re still suffering from material economics, wage inflation, transportation costs – all that stuff that started after COVID,” he said. “It’s still been pretty relentless with us.”
