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October 14, 2019 09:15 AM

Suppliers feeling the impact of UAW's GM strike

Hannah Lutz and Michael Martinez
Automotive News
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    General Motors CEO Mary Barra met privately with union leaders during the week of Oct. 7.

    DETROIT—Damage from the United Auto Workers' nearly monthlong strike against General Motors goes far beyond the plants that have been surrounded by picket lines, and recovery after it ends could take significant time for the dealerships, suppliers and other employers that depend on GM. Some small businesses have warned they're in danger of failing from the lost revenue.

    By the end of last week, some 150,000 workers either had been laid off or had their pay reduced as the walkout "ballooned in scope," Anderson Economic Group said. The Michigan consulting firm's figure includes 75,000 supplier employees and 25,000 GM salaried workers. But it doesn't account for restaurants and shops in factory towns that are seeing sales slump as GM workers adjust to living on just $250 a week in strike pay.

    Suppliers are feeling the impact. Workers have been laid off at Adient, Cooper Standard Automotive Inc., American Axle & Manufacturing, Lear Corp., Magna, ZF North American, Busche Performance Products and Android Industries, among others.

    A manager at a Michigan supplier, who asked not to be identified, said that it has laid off more than half of its work force because of the strike because the vast majority of the supplier's business is from GM.

    He added that Anderson Economic Group's estimate of 75,000 supplier layoffs as of last week might be understated.

    The strike has created "a stain on the economy that no one will be able to clean up," the manager said. "Any sales that would have been generated during those four weeks has been severely compromised. We will survive, although we will have a serious stain on the year's performance."

    For suppliers that are highly dependent on GM, one-twelfth of the year has been wiped out. "That would take what might have been a good or a very good year and blow it up. The trickle-down effect of this is massive," the manager said.

    Dealers had to tell irritated customers that some repairs couldn't be done because parts weren't available. They were also running out of loaner vehicles to help those customers get around while they waited.

    Although most dealerships still had plenty of vehicles on their lots to sell, some said fixed operations profits were being strained. Even if the strike were to end quickly, stores could start to miss out on monthly bonuses tied to vehicle or parts sales, and deliveries might not return to normal until after the busy year-end shopping season begins next month.

    "We feel like we are collateral damage that neither GM or UAW cares about," said Jay Frye, director of fixed operations at Young Automotive Group in Layton, Utah. "The sad thing is that at the end of the day, GM and UAW will eventually come to an agreement and will be able to go forward better than before—but the dealer body will have paid a substantial price in profits, employee earnings and customer perception."

    As union members continued picketing around the clock, UAW and auto maker leaders exchanged public barbs last week in the form of terse statements and videos accusing each other of stalling negotiations. The UAW claimed GM was using the media to spread "half-truths."

    GM CEO Mary Barra waded into negotiations for the first time during the week of Oct. 7, summoning UAW President Gary Jones, the union's top GM negotiator and other officials for a private meeting aimed at speeding up discussions.

    "The strike has been hard on you, your families, our communities, the Company, our suppliers and dealers," GM said in a statement. "We have advised the Union that it's critical that we get back to producing quality vehicles for our customers."

    Melissa Burden, Automotive News staff, contributed to this report.

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