Automotive suppliers at every tier are playing the waiting game as the United Auto Workers strike unfolds, preparing for potential layoffs should it be a prolonged work stoppage.
The union's walkout at midnight Sept. 15 has an impact beyond the three targeted plants — Ford's Michigan Assembly in Wayne, Stellantis NV's Toledo Assembly Complex just across the Ohio border and General Motors' Wentzville Assembly plant near St. Louis.
The strike will halt production of popular, high-demand vehicles including the Ford Bronco and Ranger; the Jeep Gladiator and Wrangler; and the GMC Canyon and Colorado. Major suppliers to these plants include Lear Corp., Dana Corp., Superior Industries, Cooper Standard, Tenneco and Martinrea, to name a few.
Crain's Detroit Business, a sister paper of Plastics News, reached out to more than a dozen tier-one suppliers for comment on strike impact. Sources at several companies said they are preparing for layoffs if the strike drags out, but they declined to provide details on the record, saying the situation is fluid and employees haven't been notified of disruption contingency plans.
Seating supplier Bridgewater Interiors was not immediately impacted by the work stoppage Friday, but president and CEO Ron Hall said the company is on alert.
"We've done some preliminary planning around responding to any strike actions," Hall said in an email. "We hope to avoid layoffs and furloughs, but they are possible if strikes impact us."
Livonia, Mich.-based AlphaUSA, on the other hand, will feel the fallout soon, said president and CEO Chuck Dardas. The company employs 190 in two metro Detroit plants that supply metal fastener assemblies and stampings to each of the factories targeted by the UAW.
"The impact on us depends on how they continue to deploy their strategies," Dardas said. "If they all go down, it's not gonna be pretty for anyone."
Dardas said he will have a better idea of the impact Sunday when the supplier receives its releases, or request for parts, from its customers. The bulk of Alpha's business is supplying directly to the automakers. Business has been booming the past couple months, Dardas said, as automakers built up inventory in anticipation of the labor contract deadline.
"We've been working furiously to keep up with demand knowing it was kind of a preamble to what's happening right now," Dardas said, adding that parts releases in August were up 35-40 percent from where they would typically be.
The executive said no layoffs are being planned in the immediate term. "We don't know the duration of this. We're not going to do anything precipitous or knee-jerk. It's really important to us that we take care of families here."
John Walsh, president and CEO of the Michigan Manufacturers Association, said OEMs and their supply chain have been building up inventory to hedge against a strike for a few months. Supplier giants such as Lear, BorgWarner Inc. and Adient plc have been bracing for the disruption for at least a month as UAW President Shawn Fain ratcheted up the tension.
If each of the Detroit 3 went down completely, it would cost Lear about $140 million of revenue a week, according to executive comments made in its most recent earnings call. In that same scenario, it would cost Adient $80 million to $100 million a week, while BorgWarner said its North American exposure to the Detroit 3 amounts to a little less than $250 million per month.
Lear declined to comment further. Neither Adient nor BorgWarner responded to requests for comment.
Executives at Canadian supplier Magna International, which has a large presence in metro Detroit, are closely monitoring the strike, said spokeswoman Tracy Fuerst.
"We have focused considerable attention on contingency planning to proactively address any temporary business disruptions to our operations," Fuerst said in an email. "If that time comes, we are prepared in terms of temporarily scaling back production on affected programs as efficiently as possible, while being equally prepared to ramp up quickly when ready."
She declined to detail specific impacts on the company's operations but said it remains "hopeful that the parties will be able to reach amicable agreements and the disruption and potential impact will be minimal."
Walsh said the strike will have ripple effects on Michigan's economy, which is steeped in automotive.
"Shutting down any one part reverberates through the smallest and largest manufacturers, rather quickly.," Walsh said in an email. "We are aware that the OEMs and their supply chain have been building up some inventory in anticipation of a strike for a few months. We are not aware of layoff plans with any degree of specificity, but certainly expect that layoffs throughout the supply chain are absolutely likely if a strike, rather limited or broad, continues."