As the UAW strike against the Detroit 3 enters its sixth week, suppliers are cutting back on capital expenditures and warning that many smaller Tier 2 and Tier 3 parts makers could soon be approaching a financial tipping point.
"I think [UAW President] Shawn Fain understands that if this goes any deeper, it's going to cause some permanent damage to the supply chain because the impact has been real and is increasing," a source at a large Tier 1 supplier told Automotive News. "We're talking about millions of dollars per week in an impact to our performance, and we're just one supplier."
On Oct. 11, the UAW expanded the strike to include Ford's large Kentucky Truck Plant in Louisville, Ky., which builds highly profitable heavy-duty pickups and large SUVs for the automaker.
Sam Fiorani, vice president of global vehicle forecasting for AutoForecast Solutions, said the walkout is likely to impact smaller suppliers to Kentucky Truck particularly hard moving forward. That's because the volumes at the plant are so high that many supplier operations depend on that business for most or all of their sales, he said.
"If they're not calling on parts, they're going to be hurt real quick."