United Auto Workers Strike's Ripple Effects on Trucking and Suppliers: A Growing Concern
Our articles may contain affiliate linksLogistics and supply chain experts are sounding an alarm, warning that the far-reaching consequences of the targeted United Auto Workers strike against the Detroit Three automakers will have a significant impact on the trucking industry and could potentially lead to smaller tier 2 and 3 suppliers facing bankruptcy.
Mary Barra, CEO of General Motors, emphasized the importance of getting back to work, stating that for every General Motors job, six others in the economy depend on their operations.
The trucking industry, which plays a crucial role in the nation's freight economy, is expected to feel the brunt of the strike's effects. Chris Spear, President of the American Trucking Associations, pointed out that trucks transport over $950 billion worth of cars, trucks, and parts, making them susceptible to disruption if the strike persists.
Data from FourKites reveals a significant increase in rescheduled over-the-road auto shipments from Mexico to the United States between Aug. 20 and Sept. 14. This rescheduling is a precautionary measure by auto firms in response to the real threat of the strike causing delays in inbound parts from Mexico.
Approximately 8% of all over-the-road auto shipments from Mexico to the U.S. have been rescheduled, compared to the average rate of 5% for shipments. The transit time for these shipments has nearly doubled, with OEMs accepting longer transit times to reduce costs while maintaining essential components in transit in case the strike is resolved promptly.
Based on the current state of negotiations, it is predicted that volumes from Mexico will continue to decline, affecting the trucking industry and suppliers.
The U.S. Chamber of Commerce reports that around 5,600 U.S. suppliers and over 690,000 supplier jobs are tied to the Detroit Three automakers, accounting for a significant portion of their business. The smaller suppliers, already grappling with increased costs and reduced profits, may face the need for bankruptcy protection if the strike persists for weeks.
The American Automotive Policy Council estimates that each automaker assembly plant job within the Detroit Three supports approximately seven other jobs with suppliers, totaling about 871,000 workers.
A prolonged strike is seen as potentially devastating for tier 2 and lower-tier supply chain providers due to a combination of high interest rates and a lack of PPP funding, especially for those with limited cash reserves.
The repercussions of reduced parts production will not only affect the trucking industry but also have a ripple effect on dealership supply chains nationwide. Auto parts shortages resulting from the strike can impact consumers' ability to get their vehicles repaired, potentially disrupting their daily routines and commutes to work, leading to a broad and far-reaching impact on the consumer transportation system
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Highlights of the article
Logistics and supply chain experts are concerned about the impact of the United Auto Workers strike against the Detroit Three automakers on the trucking industry and smaller tier 2 and 3 suppliers.
Mary Barra, GM's CEO, emphasized the importance of getting back to work, noting that many jobs in the economy depend on automotive manufacturing.
Chris Spear, President of the American Trucking Associations, highlighted the significant role of the U.S. auto industry in the nation's freight economy, with over $950 billion worth of goods at stake.
Data from FourKites showed a substantial increase in rescheduled auto shipments from Mexico to the U.S., driven by concerns about the strike disrupting parts supplies.
Approximately 8% of all auto shipments from Mexico to the U.S. have been rescheduled, compared to the usual rate of 5%, with transit times nearly doubling.
It is predicted that volumes from Mexico will continue to decline, impacting the trucking industry and suppliers.
The U.S. Chamber of Commerce highlighted the close ties between the Detroit Three automakers and suppliers, with smaller suppliers at risk of bankruptcy if the strike persists.
A prolonged strike could have a devastating impact on lower-tier supply chain providers, given high interest rates and limited cash reserves.
The shortage of auto parts could disrupt not only the trucking industry but also dealership supply chains, potentially affecting consumers' ability to get their vehicles repaired and impacting their daily lives and commutes.
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