American auto workers will strike at 38 more supplier plants starting at noon Friday, the union representing the workers announced, citing little progress in negotiations with two of Detroit’s three automakers.
Shawn Fain, president of the United Auto Workers (UAW), said Ford had made progress on its offer, but Stellantis and GM had not, prompting him to call strikes at those companies’ supplier plants in 20 states.
Earlier this week, 13,000 workers at three facilities were on strike: General Motors, Ford and Stellantis. They are now in their eighth day of work action. Those strikes will continue, Fain said.
Ford’s progress included restoring the cost-of-living allowance formula the union lost in 2009, an improved profit-sharing formula and immediately converting temporary employees with 90 days of service upon ratification.
The ongoing strike by auto workers at U.S. auto plants will paralyze manufacturing plants in Canada within days, according to industry experts.
Flavio Volpe is director of the Automotive Parts Manufacturers Association, which represents companies that make components for vehicles that are manufactured in North America.
He said companies breathed a “sigh of relief” when the tentative deal between Unifor and Ford was announced.
But he said those companies are concerned about threats from the United Auto Workers to expand job actions if General Motors, Ford and Stellantis don’t make “serious progress” on the union’s contract demands.
Volpe said if the strike at a Jeep production plant continues, parts makers in Canada will adjust their production schedules next week.
“The auto parts companies, the employers that I represent, will be shutting down those plants,” Volpe said.
It is a difficult time for the recovery of the manufacturing sector
The North American auto industry operates on a just-in-time production schedule in which the Detroit Three automakers purchase parts from large, first-tier supplier plants, which source components for those parts from smaller, second-tier supplier plants.
A series of global crisis-level events including the disruptive and deadly COVID-19 pandemic, as well as an ongoing global microchip shortage, have put those smaller supplier plants in difficult financial positions.
That has made the timing of the UAW strike difficult for tier one and two providers, “especially given the disruptions over the last three years and how thin everyone’s balance sheets have become,” Volpe said.
SEE | Supply chain expert says UAW strike shows cracks in chains
Dennis Darby represents thousands of companies responsible for more than 80 per cent of the Canadian manufacturing sector as president of the Canadian Association of Manufacturers and Exporters (CME).
“This couldn’t come at a worse time,” he told Breaking:.
Darby is in Washington, DC, meeting with his American counterparts this week and said the strike is the most important thing.
He believes the manufacturing companies he represents in Canada are preparing for the impact, which he believes will come within days.
“All the big companies are obviously affected, you know the big ones like Magna. But of course so are a lot of secondary and tertiary suppliers that make components in the system,” Darby said.
He welcomed news of a tentative agreement between Unifor and Ford that, if ratified by members, will prevent strike action that would close engine and assembly plants in Ontario.
Labor action shows cracks in the system
Automotive and supply chain expert Jan Giffiths believes it is second-tier suppliers that are in a difficult position at the moment due to pandemic disruptions, a tight labor market with rising wages and the global crisis. of microchips.
“The combination of all these things is putting enormous pressure on the tier two supply base, and now we throw a punch on top of that? The dominoes are going to start falling.”
Griffiths, who has decades of experience leading top-tier global supply chain organizations and is the founder of Gravitas Detroit, said suppliers in the United States are already issuing layoff notices.
“If your customer stops sending you orders because you’re not building cars, what do you do then? You have to conserve cash to survive,” Griffiths said, adding that traditionally that would mean laying people off.
SEE | How the UAW strike could affect vehicle sales
But there is a high demand for skilled manufacturers in Canada and the United States, which may cause companies to look for creative ways to keep employees on the payroll instead of laying them off.
“That would be the last lever pulled because trying to bring back qualified people and go through a whole retraining and commissioning initiative is going to be extremely difficult,” Griffiths said.
Volpe said the companies he represents will also look for ways to keep people on staff.
“They will hold on tightly to employees there because of the incredibly tight labor market and the last thing anyone wants to do is lose good people and have to search the market for new people.”
Darby, who said most manufacturers that supply the auto industry operate along the Highway 401 corridor in Ontario, believes affected suppliers will reduce hours or try to secure other contracts.
“What we saw during COVID in the short term was people finding ways to try to retain their people even if it meant fewer hours because it’s a lot easier than trying to find a replacement.”