Michigan’s auto suppliers are considering mass layoffs and furloughs as the United Auto Workers union continues its strike against the Detroit Big Three. Industry advocates with MEMA, the Vehicle Suppliers Association, expect companies will fire more than half of their workforce if the work stoppage lasts a full month.
“We are going to start to see suppliers that simply can't manage the losses, can't manage the shutdown and get into real financial difficulty here in the coming weeks,” said Julie Fream, President and CEO of MEMA Original Equipment Suppliers.
Companies have stopped delivering shipments to striking assembly plants, Fream explained, and manufacturers are incurring additional costs because of the decreased demand for parts.
UAW members at Ford, Stellantis and General Motors have joined picket lines at more than 40 sites throughout the country. Dozens of facilities are on strike in Michigan.
The state is home to several original equipment suppliers (OEMs), which provide parts for carmakers across the world. There are 26 OEMs headquartered in the state, according to a recent report from the Detroit Regional Chamber.
Fream expects a “significant withdrawal of unemployment benefits from the state" should the strikes continue.
MEMA estimates suppliers have cut 18% of their workforce since the onset of the strike, with layoffs occurring throughout the auto sector.
“Your salespeople. Your engineers. People that aren’t directly impacted on the manufacturing floor,” Fream said. “As time goes on in this strike, we will see increasing numbers of cutbacks.”
The consulting firm Anderson Economic Group underscored the financial toll of the strikes, calculating total losses at $3.95 billion as of September 29. Of that, $1.29 billion have come from OEMs.
“Suppliers were particularly hard-hit by the UAW’s strategy of announcing specific plants to be struck just hours before they were shut down,” Patrick Anderson, AEG’s principal and CEO, said in a statement. “The shutdown of 38 parts distributions centers also crimped dealership service operations and, of course, caused more UAW workers to lose wages.”
According to AEG’s estimates, the Big Three manufacturers have lost $1.12 billion, while UAW and non-union auto workers lost $325 million in direct wages.
MEMA is asking the federal government to provide small loans to OEMs to prevent them from going under during the UAW strikes. In a recent letter addressed to President Joe Biden, the suppliers association pushed for the creation of an emergency workforce training program to keep facilities open.
Industry analysts report the equipment manufacturing industry's distress pre-dates the strikes. Chip shortages and the lasting impacts from the COVID-19 emergency have contributed to the sector's financial strain.
In an open letter, the Detroit Regional Chamber emphasized the Big Three’s diminished status in the global automotive landscape as a significant reason to resolve the strike swiftly. The business group highlighted China’s increased domination of the auto market and the rise of Tesla as “the industry’s most valuable automaker.”
While supporting a raise in wages, the chamber criticized union requests for built-in cost of living increases and four-day workweeks.
“The UAW message being sent to the nation and beyond is that ‘it is hard to do business in Michigan,’” the chamber wrote. “This will have a clear negative impact on new investment in Michigan and make keeping existing businesses more difficult.”
According to the MICHauto lobbying group, Michigan’s automotive sector employs more than one million people, representing 20% of the state's total jobs.
