Entering the third week, strikes at two General Motors Corp. plants already are wreaking havoc on plastic parts suppliers, leaving a trail of thousands of laid-off workers and concern over a worsening situation.
Many suppliers fretted that a prolonged strike could yield a bottom-line disaster. At Toronto-based Versatech Industries Inc., several hundred workers were laid off at its Tarxien plant in Ajax, Ontario, and a PaintPlas Inc. facility, said Versatech President Rob Lee.
Yet, a real problem may be brewing if the strike is not settled quickly, Lee said.
``Most of our plants will be going down in a week or two if the strike is still on,'' Lee said. ``The impact is too premature to tell ... It's putting pressure on our end, and we'd expect to have massive layoffs.''
Automotive analysts have said the labor dispute could be devastating to GM and the industry. As of late last week, the strikes at plants in Flint, Mich., had idled 84,200 GM workers, or about 28 percent of the automaker's North American hourly work force. Both GM and the United Auto Workers have stood their ground.
The strike also has put pressure on large material suppliers, including DuPont Automotive in Troy, Mich. While not yet facing layoffs, the firm saw resin shipments start to slow by the end of last week, said spokesman Terry Cressy.
DuPont expects its shipments to tail off more dramatically this week if the strike goes on, Cressy said. DuPont shut several plants for unplanned maintenance while strike details are ironed out.
``That gives us a cushion of maybe two weeks,'' Cressy said. ``Hopefully, soon after the shutdowns, we'll be able to put production back on track ... But [the strike] will have a major impact on sales starting next week.''
The production drop might have only just begun, especially for Tier 2 suppliers feeding components to larger parts producers.
Freudenberg-NOK GP, a maker of plastic extruded seals and other parts, has laid off 90 workers from its Scottsburg, Ind., plant, which makes brake and chassis parts for Delphi.
The problems could multiply if the strike slides down the supplier food chain in the next few weeks, said Sallianne Williams, vice president for global customer support with the Plymouth, Mich., company.
``I think the impact is just beginning to be felt,'' Williams said. ``It's the smaller, Tier 2 suppliers that have yet to really be affected.''
Some suppliers, including Grand Rapids, Mich.-based Lacks Enterprises Inc. and Troy-based Budd Co. Plastics Division, have already shifted production away from GM projects and into work for other automakers.
``We do a fair amount of work with GM, but not enough to have an impact,'' said Budd spokesman Paul Flancbaum. Budd makes parts from sheet molding compound for GM. ``We can find other work for people to do in the plants.''
Yet that can only happen for several weeks, said equity analyst David Andrea at Roney & Co. of Detroit. After that, inventory levels fill too fast to keep diverting production from GM work, he said.
While the hourglass is losing sand at many supplier offices, others have already faced massive layoffs. GM unit Delphi Automotive Systems has laid off 4,800 workers at eight plants, said spokeswoman Jennifer Timkey at the Delphi's Warren, Mich., offices.
Four of those closed plants — in Adrian and Grand Rapids, Mich.; Vandalia, Ohio; and Matamoros, Mexico — make plastic interior components that include instrument panel covers, interior trim and airbag covers.
The reason for the shutdowns is also one of the industry keys to improved efficiency: just-in-time manufacturing. That means a finished part is immediately shipped for use instead of gathering dust on warehouse shelves.
``When a part is not needed on the other end, there's no need to produce and stockpile it,'' Timkey said.
About 63 percent of Delphi's business is from GM, but the firm would like to lower that figure to half its sales by 2002, Timkey said.
Other suppliers may wish they had more business outside GM. Seating suppliers Lear Corp. of Southfield, Mich., and Johnson Controls Inc. of Plymouth, Mich., were hit hard by the strike.
Lear had laid off 1,700 people at seven plants by the end of the day June 18, while JCI had temporarily dismissed 600 workers. Of JCI's numbers, almost half, or 275 people, were laid off at Holland, Mich., Prince Corp., the JCI unit that assembles plastic interior parts.
Neither company could speculate on future layoffs. Andrea, who follows Lear, said the Southfield parts maker lost between $10 million and $15 million last week in business to GM.
Lear is not alone. Collins & Aikman Corp., a Charlotte, N.C., supplier, estimated that an ongoing strike would cost it as much as $30 million in lost sales a month, said spokeswoman Kim West.
Meanwhile, United Technologies Automotive of Dearborn, Mich., announced its first strike-related layoffs. The injection molder of interior parts sent home 85 workers from its Traverse City, Mich., plant, which molds electrical switch housings for GM.
The company plans to lay off another 115 workers at that plant this week if the strike progresses, said spokesman Tom Andrew.
Fairlawn, Ohio-based GenCorp Inc. laid off 1,000 workers at two plants June 16, according to Rubber & Plastics News, a sister publication to Plastics News. The furloughed workers were at plants in Berger, Mo., and Welland, Ontario, that make rubber and plastic seating parts.
``I wouldn't be panicking yet,'' analyst Gregory Misztela of Griffiths McBurney & Partners in Toronto said. ``Usually, strikes are not prolonged more than a couple of weeks. It will have some effect on earnings, but it's not material yet. Just don't panic.''