Detroit — Suppliers across the automotive supply chain are paying close attention to inventory, order volumes and capacity through immediate challenges like the UAW strike against automakers and the long-term shift to EVs.
Resin supplier M. Holland Co. is watching its own and customers' inventories as the industry responds to the effects of the strike, Matthew Zessin, automotive market manager at M. Holland, told Plastics News in an interview during the North American International Auto Show in Detroit.
"Chemical manufacturing plants are not quick to turn off and not quick to start up," Zessin said.
Raw material suppliers are facing decisions to "turn the pipes off or keep them rolling based of their inventory," he said. "Trying to balance the timing of the strikes is difficult because nobody really knows what's going to happen. … If all three [automakers] come back at the same time, you're going to have huge constraints on the transportation pipeline."
"Given that all three [OEMs] are involved with the strike, one could sign a deal and then [the other two] could still be on strike," Michael Gumbko, automotive strategic account manager at M. Holland, told PN. "Any of our clients molding products for all three may be able to bring in some employees. But if they're heavier with the other two, they're still going to be struggling with production and cash flow."
"We're trying to balance how much material we're carrying," Zessin added. "We're telling our customers to not completely deplete their inventories."
Globally, material inventories are high and "available," he said, adding that the market isn't "consuming as much plastic right now as we had been over the last couple of years. There's more capacity coming online."
"[The industry] hasn't fully recovered from [events like] winter storm Uri in 2021," Zessin added. "Some of these molders are still struggling through some hard times. [Suppliers] are watching some customers."
As "cash has gotten a lot tighter for everybody," he said, suppliers need to be watching out for "all those things that you can't plan for … that could [make] a big ripple" through the industry.
"When the winter storms happened, everything was bottlenecked already from COVID, from people taking plants down and trying to deal with what the pandemic was going to be," Zessin said. "It just completely threw the entire plastics industry for a big loop."
"With interest rates where they are, no one is borrowing money," Gumbko said. "A long strike for suppliers that are already short on cash … with an elongated strike we could see some [molders] go bankrupt … or be acquired."