The United Auto Workers” strike against General Motors Corp. present more challenges for auto-parts suppliers, which have struggled with bankruptcies and increased competition in recent years.
The impact will largely depend on the length of the work stoppage and the strength of the companies” ties to GM. But analysts said it will quickly ripple through the industry.
“Every car that”s not built means there”s 10,000 components that don”t get sold and don”t get put on the car,” said Neil De Koker, president of the Original Equipment Suppliers Association, an industry trade group.
Mr. De Koker said the timing would be key.
“If it”s four or five days, it won”t be nearly as traumatic as four to five weeks.”
Several suppliers have strong links to GM, including American Axle & Manufacturing Holdings Inc., Magna International Inc., Lear Corp. and Delphi Corp., which was spun off from GM into a separate company in 1999.
Auto-parts suppliers have separate labor agreements from the GM contracts.
Delphi has been trying to emerge from bankruptcy protection after nearly two years. It is one of several auto-parts suppliers that have been hurt by production cuts by car and truck manufacturers in North America.
Craig Fitzgerald, a partner and auto analyst with Plante & Moran PLLC in Southfield, Mich., said major suppliers would be able to weather a 10-day strike “very well,” but it would have a negative impact on sales and earnings.
“Big Tier 1 [suppliers] have been very mindful that a strike could happen, and they”ve been preparing for this for six to nine months,” Mr. Fitzgerald said.
American Axle & Manufacturing, for example, is the main supplier of drivetrain components to GM for rear-wheel-drive trucks and sport utility vehicles built in North America. Sales to GM accounted for more than three-fourths of American Axle”s net sales in the first half of 2007.
Renee Rogers, an American Axle & Manufacturing spokeswoman, said the supplier would “support our customers with whatever they need.” She declined to elaborate on the company”s preparations for a GM strike.
Magna International, which produces pickup-truck frames for GM, said that depending on the length of the strike, the company “may be required to suspend the supply of parts to General Motors.”
In Canada, a lack of engines and transmissions made by U.S. workers who are on strike will hurt vehicle production. GM is Canada”s largest exporter, producing 794,419 vehicles last year, and GM buys about 50 percent of all the auto parts manufactured in Canada.
Canadian Auto Workers President Buzz Hargrove said more than 80,000 people could be laid off by the end of the week if the strike drags on. Mr. Hargrove said 17,000 GM employees in Canada, 40,000 workers at independent-parts producers and thousands of jobs in related businesses could be affected.
“Our car plants will be impacted almost immediately,” Mr. Hargrove said.
GM Canada”s No. 1 car plant in Oshawa, Ontario, east of Toronto, stopped producing Chevrolet Impala sedans yesterday, and the No. 2 plant, assembling the Pontiac Grand Prix and Buick Allure, was expected to shut down by last night.
The Oshawa truck plant has enough parts to keep building Silverado and Sierra pickups for about two days, Mr. Hargrove said.