The spillover effects are hitting automotive suppliers hard, with some firms in Michigan and Ohio resorting to temporary layoffs and warning that bankruptcy looms if the strike carries on much longer.
More than 3,000 supplier employees have been affected so far, a Washington Post tally shows, while an industry association says nearly 30 percent of its supplier members have resorted to layoffs.
Beyond the auto sector, U.S. Steel blamed the strike and the prospect of weaker orders for its decision to idle a blast furnace in Granite City, Ill. and temporarily lay off 300 workers.
The fallout shows the outsize role the auto industry plays in the U.S. economy, to which it contributes about 3 percent of gross domestic product.
It also comes after several years of tumult in the auto sector caused by pandemic-related gyrations in supply and demand, including a computer chip shortage that idled factories for weeks at a time.
An industry group representing auto suppliers, MEMA, is urging the Biden administration to expedite an aid package for the companies — a step that the administration has been preparing to take in recent weeks, The Post has reported. Grants and loans are among the options the White House has considered. The White House didn’t immediately respond to a request for comment.
Nearly 30 percent of MEMA members surveyed by the group last week said they have laid off some workers as a result of the strike. More than 60 percent said they were expecting to begin layoffs by mid-October.
“Many vehicle suppliers are still recovering following covid, the chip crisis and continued labor shortages,” Bill Long, president of MEMA, wrote in a letter to President Biden last week. Small suppliers are “in every state throughout the U.S. and are often the largest employer in a county or region,” he wrote.
Industry executives and administration officials warn that widespread failure of these smaller supplier firms — which number in the thousands — would make it very difficult for the Detroit automakers to fire back up again once the strike is over. The chip crisis showed that even one missing part can bring entire assembly lines to a halt.
A striking Jeep plant in Toledo — a massive facility whose 5,800 UAW workers walked off the job Sept. 15 — shows how the shutdown quickly rippled outward. Nearly a dozen third-party suppliers to that factory have already temporarily laid off 2,100 workers, Bruce Baumhower, head of the UAW Local 12 union hall, told The Post.
He knows the tally because those 2,100 supplier workers are UAW members. “This has a huge, huge impact on our local,” he said, ticking off the names of suppliers that make axles, seats, dashboard displays and other parts.
Many of the temporarily laid-off supplier workers around the country will be relying on state unemployment benefits. How quickly they will get back to work is still unclear.
Some suppliers lack the deep pockets to sustain a long suspension of their sales. Many are family-owned businesses, while others are owned by private equity investors. The largest suppliers tend to be publicly traded companies with more resources to ride out the uncertainty.
One supplier in Michigan told The Post that it has had to lay off all its workers because its orders fell to zero after the strike began.
“I completely respect the right to try to bargain for better pay — I think they do deserve better pay,” the owner of the supplier said of the UAW, speaking on the condition of anonymity to avoid reprisals from the union or the Big Three.
But he said he worries about it stretching on too long.
“If it lasts as long as I think it’s going to last, it’s going to destroy the supply base, which is going to be horrible for the Big Three automakers. What’s the end game here? Is it trying to get to a deal that works or is it trying to destroy the Big Three automakers?”
He also worries that some of the union’s rhetoric is vilifying the companies in a way that could drive away customers. “At the end of the day if you paint them as the villain … why would I want to buy one of their vehicles? If they’re the villains I’ll just go buy a Toyota. And that’s not what you want!”
Some suppliers warn that their layoffs could broaden over time. In a filing last week with the state of Michigan, Eagle Industries estimated it would have to lay off 60 workers but said that was “subject to change due to evolving business circumstances.”
In another filing with the state, CIE Newcor estimated that it would need to lay off nearly 300 employees for about a month but said the duration depends how long the strike lasts.
LM Manufacturing, a joint venture that makes car seats for a striking Ford factory in Wayne, Mich., has temporarily laid off 650 workers, according to Dave Neimiec, a spokesman for one of the JV owners, Magna International.
