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Home » Global Logistics » Big Three Carmakers' Most-Exposed Parts Suppliers Stare Down $38B Hole
LABOR DISPUTE

Big Three Carmakers' Most-Exposed Parts Suppliers Stare Down $38B Hole

A LINE OF PEOPLE BY THE SIDE OF A ROAD HOLD UP SIGNS SAYING UAW ON STRIKE TO PASSING CARS

Photo: Bloomberg

September 20, 2023
Bloomberg

Auto-parts makers that supply all three of the big Detroit carmakers have more than $38 billion of revenue at risk if strikes by the United Auto Workers expand as threatened. 

At least 76 publicly-traded companies supplied the trio of Ford Motor Co., General Motors Co. and Stellantis NV in their most recent reporting period, according to data compiled by Bloomberg. Nexteer Automotive Group Ltd. is the most exposed with 76% of its revenues coming from the three, the data shows, and at least 21 companies rely on the group for more than a quarter of their sales.

The United Auto Workers union called its first-ever walkout across all three of the legacy Detroit manufacturers on September 15. Almost 13,000 workers walked off factory floors where some of the automakers most profitable models are assembled, including Ford’s Bronco sports utility vehicle and GM’s Chevrolet Colorado pickups. The strikes could cost 3,200 vehicles daily, according to S&P Global Mobility.

AUTOMAKERS SUPPLIERS EXPOSED SEP 19 BLOOMBERG.png

Suppliers would be among the worst hit if picket lines spread to more plants. They’ve already been battered by inflation, stop-start interruptions from chip shortages, and costly investments in electrification that are yet to pay off. 

Suppliers are “going to feel the most pain, because they haven’t recovered fully, and they’re not getting the same returns that they’ve historically been achieving,” said Brandon Boyle, a partner at auto consultancy Roland Berger in Detroit.

Michigan-based parts maker CIE Newcor said it may lay off nearly 300 employees if it closes its facility temporarily due to the strikes, according to a Worker Adjustment and Retraining Notification, or WARN, notice. 

The UAW plans to expand its strike at noon on September 22 unless substantial headway is made towards labor contracts. 

If the situation escalates, the car companies or their direct suppliers may have to support smaller companies in the supply chain to protect their production plans, Boyle said.

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