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Economic group says UAW-Big Three strike is in the 'danger zone'
Consulting firm Anderson Economic Group says this month-long strike has entered the danger zone — and auto parts suppliers are suffering.
(FOX 2) - The ripple effects from the UAW's strike continue to spread further through the auto sector, hampering the industry, and threatening to put some suppliers out of business completely.
According to one economic forecaster, the United Auto Workers strike has reached the "danger zone" as idle production lines cease building vehicles, the smaller firms that contribute to the supply chain could be on the chopping block.
Meanwhile, the Detroit Big 3 are diverting more resources toward labor negotiations with Stellantis pulling out an annual trade show in Las Vegas that showcases the newest technologies hitting the electronics industry.
"At this point, I don’t see a winner in this strike getting longer," said Patrick Anderson of the Anderson Economic Group. "This is not a good way to stay in charge. This is a good way to lose your leadership. We look bad in front of consumers, we look bad in front of other members of the industry. The rhetoric talking about car companies like they are our enemies is very unfortunate."
Suppliers may not survive
One of the darker omens for the auto industry is now that the length of the UAW strike has entered its second month, some of the smaller companies that contribute to the assembly plants that build the vehicles could go out of business.
On Day 34 of the "Stand Up" Strike, it's the manufacturers that make plastic and metal parts for Ford, General Motors, and Stellantis vehicle models that now risk running out of money.
"So they cover the gamut," Prof. Marick Masters of Wayne State University said. "They are not necessarily ‘mom-and-pop,’ but they’re small businesses. They may have 10 to 20 employees, 30 employees or less. And they don’t generate a whole lot of revenue on an annual basis, but they generate enough to sustain that number of workers and provide good living wages for people."
According to some surveys that Masters referenced, a third of suppliers are having some financial difficulty.
The AEG said supplier wages and earnings are down nearly $2.7 billion.
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As UAW strike marches on, smaller auto suppliers may be left behind
Marick Masters, a Wayne State University business professor, says the small suppliers make the plastic and metal parts that go into the cars we love. And right now, they risk running out of money.
No return for some models
Anderson also warned that some vehicle models may have hit the "point of no return."
"Right now if we don’t get to work right away. I do think there will be entire production lines on the chopping block," he said.
While flagship models like the Ford F-150 and the Chevrolet Silverado will undoubtedly remain, smaller crossover vehicles may not make it through the strike.
In total, the strike has hit the auto industry with $7.5 billion in losses, and about 30% of that is in Michigan. About half of those losses came out of Detroit's Big Three automakers' profits.
"For Michigan in particular, and the auto industry centered here, we’ve already had a lot of damage done," Anderson said. "But we’re in the danger zone in terms of being able to sustain all the investments that we have, and all the businesses that we have now."
Stellantis pulls out of CES
Stellantis announced Tuesday it would be canceling its participation in CES 2024, which is a massive technology trade show hosted in Las Vegas. Scheduled for January, Stellantis said it was focusing on "preserving business fundamentals" by pulling out of the show.
"Being second to none in value creation for all stakeholders – customers, employees and investors – is a key component of the Stellantis Dare Forward 2030 strategic plan. In light of the current status of negotiations in the United States, preserving business fundamentals and therefore protecting the future of the company is a top priority of Stellantis leadership," it said in a press release.
The Consumer Electronics Show often features the latest tech that will be made available to consumers. Despite vehicles' main purpose being for driving, auto companies have increasingly integrated technology into their models.
Tracking layoffs
Just how many layoffs has this month-long strike caused?
It's a difficult answer since the auto sector touches so many other industries. The disruption of the supply chain has also hampered parts and components companies not directly connected to Ford, GM, and Stellantis.
As for direct layoffs, the figure lands at around 6,000 layoffs. Those don't include union members - of which 34,000 are now picketing.
Here's how many autoworkers have been laid off by Detroit's Big Three due to UAW strike
As the UAW strike continues, there are 34,000 members striking against Detroit's Big Three. Meanwhile, Ford, Stellantis, and General Motors have laid off thousands of workers as there's no end in sight to the strike.
More UAW Strike Coverage:
- Here's how many autoworkers have been laid off by Detroit's Big Three due to UAW strike
- 'This should not be Ford vs the UAW': Bill Ford addresses strike impact on future of auto industry
- Why UAW hit Ford with surprise strike at key truck plant in Kentucky