Manufacturers say American autoworker strike could idle Canadian supplier plants
American autoworkers will strike at 38 more supplier plants as of noon Friday, the union representing workers announced, citing little progress in negotiations with two of the three Detroit automakers.
Shawn Fain, president of the United Auto Workers (UAW), said Ford had made progress on their offer, but that Stellantis and GM hadn’t — prompting him to call strikes at those companies’ supplier plants across 20 states.
Earlier this week, 13,000 workers at three facilities were striking General Motors, Ford and Stellantis. They are now on their eighth day of job action. Those strikes will continue, Fain said.
Progress by Ford included reinstating the cost of living allowance formula the union lost in 2009, an enhanced profit sharing formula and the immediate conversion of temporary employees with 90 days’ service upon ratification
The ongoing strike by autoworkers at automotive plants in the United States will idle manufacturing plants in Canada in a matter of days, according to industry experts.
Flavio Volpe is head of the Automotive Parts Manufacturers’ Association, which represents companies that build components for vehicles being built in North America.
He said companies let out a “sigh of relief” when the tentative deal between Unifor and Ford was announced.
But he said those companies are worried about the United Auto Workers threats to expand job action if General Motors, Ford and Stellantis do not make “serious progress” on the union’s contract demands.
Volpe said that if strike action at a Jeep production plant continues, parts makers in Canada will adjust their production schedules next week.
“Auto part companies, employers that I represent, will idle those plants,” said Volpe.
Timing tough for rebounding manufacturing sector
The North American auto industry operates on a just-in-time production schedule where the Detroit Three automakers buy parts from large tier-one supplier plants that source components for those parts from smaller, tier-two supplier plants.
A string of global crisis level events that includes the disruptive and deadly COVID-19 pandemic, as well as an on-going global microchip shortage, has put those smaller supplier plants in difficult financial positions.
That’s made the timing of the UAW strike difficult for tier-one and tier-two suppliers — “especially given the interruptions over the last three years and how thin everybody’s balance sheets have become,” said Volpe.
WATCH | Supply chain expert says UAW strike showing cracks in the chains
Supply chain expert and Gravitas Detroit founder Jan Griffiths tells the CBC’s Chris Ensing some automotive suppliers are in a tough position with ongoing strike action in the United States, a tight labour market, and thin cash reserves. Griffiths, who was a global lead at a tier one supplier for decades, said open communication between suppliers could help companies survive.
Dennis Darby represents thousands of companies responsible for more than 80 per cent of the Canadian manufacturing sector as president of the Canadian Manufacturers and Exporters Association (CME).
“This could not come at worse time,” he told CBC News.
Darby is in Washington, D.C., this week meeting with his North American counterparts and said the strike is top of mind.
He believes manufacturing companies he represents in Canada are bracing for impact, which he believes will hit in a matter of days.
“All the all the big companies obviously are affected, you know the big ones like Magna. But of course so are lots of secondary and tertiary suppliers that make components in the system,” said Darby.
He welcomed the news of a tentative agreement between Unifor and Ford that, if ratified by members, will prevent strike action that would shut down engine and assembly plants in Ontario.
Labour action shows cracks in the system
Automotive and supply chain expert Jan Giffiths believes that it’s the tier-two suppliers that are in a difficult position right now because of the pandemic disruptions, a tight labour market with increasing wages and the global microchip crisis.
“All of these things coming together is putting a tremendous amount of strain on the tier two supply base and now you throw a strike in on top of that? The dominoes are going to start to fall.”
Griffiths, who has decades of experience leading global tier one supply chain organizations and is the founder of Gravitas Detroit, said suppliers in the United States are already issuing layoff notices.
“If your customer stops sending you orders because they’re not building cars, then what what do you do? You have to conserve cash to survive,” said Griffiths, adding that would traditionally mean laying people off.
WATCH | How the UAW strike could impact vehicle sales
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, says if the strike is prolonged, people looking to buy a car could see an effect on both price and availability.
But there’s a high demand for skilled manufacturers in Canada and the United States, which may see companies look for creative ways to keep employees on the payroll instead of laying them off.
“That would be the last lever that you would pull because trying to bring qualified people back and go through a whole retraining and startup initiative is going to be extremely difficult,” said Griffiths.
Volpe said the companies he represents will also be looking at ways to keep people on staff.
“They will hang on tightly to employees there because of the incredibly tight labour market and the last thing anybody wants to do is lose good people and have to scour the market for new ones.”
Darby, who said the majority of manufacturers supplying the auto industry operate along the Highway 401 corridor in Ontario, believes affected suppliers will reduce hours or try to land other contracts.
“What we saw during COVID in the short run, people found ways to try to retain their folks even if it meant fewer hours because it’s a lot easier than trying to find a replacement.”
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