UAW strike has caused nearly 30% of suppliers to lay off workers, survey says

About 30 percent of suppliers have had to lay off some workers because of the UAW strike against the Detroit 3, but the figure will rise significantly by mid-October, according to a recent survey.

The auto trade association MEMA, which represents more than 1,000 companies in the U.S., surveyed its original equipment supplier members to determine how the strike that began Sept. 15 has impacted the supply chain. The survey found that "nearly" 30 percent of suppliers have had to lay off some direct labor employees, and more than 60 percent expect to start layoffs by mid-October, according to a news release.

"Uncertainty has caused suppliers to move forward more aggressively to put plans in place to reduce costs and manage the situation," Julie Fream, CEO of MEMA Original Equipment Suppliers, told Automotive News. "The uncertainty of how long this will be, which plants will be impacted — all of that has challenged suppliers to plan more aggressively to ensure they can stabilize."

The results of the survey, conducted Sept. 29, illustrate the impact the strike is having throughout the auto supply chain, as well as the fragile financial state that many suppliers find themselves in following years of financial pressures stemming from the pandemic, inflation and material shortages.

MEMA found that 70 percent of automotive suppliers have concerns about their subsuppliers' "ongoing financial viability." The health of smaller Tier 2 and Tier 3 suppliers during the strike has been a major concern for the industry, with some executives warning that many of those companies could go under as a result of the strike or be unable to ramp back up to satisfy demand when the strike ends.

On Sept. 25, MEMA sent a letter to President Joe Biden urging the White House to provide loans to suppliers with annual revenue of less than $200 million, in addition to setting up an emergency work force training program that would allow more workers to stay on the job even if production stops.

Fream said federal aid would provide much-needed stability for suppliers that are grappling with business planning during the strike. The UAW has so far targeted five assembly plants, in addition to General Motors and Stellantis parts distribution centers, and escalated the strike twice.

"If we can get the administration to help suppliers, that will provide a lot of stability and take some of that unknown out of the equation," she said.

Keeping as many workers on the payroll as possible will be critical for suppliers as they look to ramp production back up following the strike's conclusion, industry experts have said. Suppliers have been looking to limit layoffs, fearing that workers will find jobs elsewhere and that the work force needed for a quick restart won't be there.

The MEMA survey found more than 50 percent of idled suppliers said they will need "at least one week" to get back to prestrike production levels.

MEMA said it will continue to survey members each week and share "critical information from the results."

MEMA also urged the White House to take action to ensure commercial vehicle crossings speed up at the U.S.-Mexico border amid added security checks by U.S. and Texas authorities. The checks have slowed the transportation of goods across the border in recent weeks.

MEMA said it met last week with the White House National Economic Council and National Security Council on the issue. It said it recommended the administration expand border crossing hours in the El Paso, Texas, and Arizona regions "to accommodate the additional trucks using these locations," and to ensure U.S. Customs and Border Protection works with the Texas Department of Public Safety to "expedite truck crossings throughout the southwest U.S."