Supplier layoffs grow as UAW strike continues, survey shows

About 39 percent of parts suppliers surveyed by the Motor & Equipment Manufacturers Association this week said they have laid off workers because of the UAW strike against the Detroit 3.

That's a higher figure than the association reported in its previous survey two weeks ago, when around 30 percent of respondents said they were forced to lay off workers. It is unclear if the layoffs are limited to the U.S.

And according to the survey, the figure will surge by the end of the month.

The group conducted the new survey Oct. 9-11.

The automotive trade association, which represents more than 1,000 companies in the U.S., found that as many as 70 percent of suppliers expect some layoffs if the strike continues through the end of the month.

Of the suppliers that have yet to lay off any of their work force, about half said they would begin doing so by the week of Oct. 30.

The UAW strike has been a jolt to the North American supply chain, which was already in a fragile state following years of reduced profits, heightened costs and shortages of key components such as microchips. Suppliers have warned that a lengthy, extensive Detroit 3 strike could have disastrous financial consequences for many companies, particularly smaller, Tier 2 or Tier 3 parts manufacturers that are crucial to North American vehicle production.

The survey found that about 80 percent of suppliers "are concerned about the financial viability of their subsuppliers," the association said in a news release. About 30 percent of those companies also have concerns about their own finances.

The association again urged the Biden administration to implement new programs to assist suppliers impacted by the strike.

It previously proposed that the federal government institute a new loan or grant program for smaller suppliers, establish an emergency training program that could keep workers on the payroll and reduce the minimum threshold amount for companies to be eligible for the Inflation Reduction Act's domestic manufacturing conversion grant program.

"The output of these suppliers, often Tier 2 or lower, is critical to the ongoing viability of the entire supply chain," the association said in the news release.

Suppliers are looking to keep layoffs to a minimum, fearing that workers will find other jobs during an extended layoff and make it difficult for the companies to ramp back up after the strike. More than 30 percent of suppliers said they will need up to three weeks to resume full production after the strike ends, with labor and material availability cited as key concerns.

"We need to keep these workers around and in the facilities as much as possible," said Ann Wilson, the association's senior vice president of government affairs, in an interview with Automotive News. "We saw during the chip crisis and COVID that workers who are laid off for an extended period of time don't come back."

The UAW strike, now entering its fifth week, unexpectedly expanded Wednesday to include Ford Motor Co.'s Kentucky Truck Plant in Louisville, the automaker's most profitable factory.

UAW President Shawn Fain on Friday said little progress was made during negotiations this week, adding that the strike is "entering a new phase" with the union no longer setting regular deadlines to escalate it.