Even before workers rejected a tentative labor agreement at Mack Trucks and went on strike at multiple facilities on Oct. 9, MEMA Original Equipment Suppliers surveyed its members on the impact of the UAW strike against the Detroit Three.
Vehicle suppliers employ over 900,000 workers, over six times more than the 146,000 UAW Detroit Three autoworkers, MEMA notes. Additionally, suppliers contribute 2.5% of the U.S. Gross Domestic Product (GDP). Key take aways from the September 29, 2023, survey include:
- Nearly 30% of surveyed vehicle suppliers have laid off some direct labor employees as a result of the strike.
- Additional suppliers will initiate layoffs with more than 60% expecting to begin layoffs by mid-October.
- 70% of vehicle suppliers have concerns about their sub-suppliers’ ongoing financial viability.
- More than 50% of idled suppliers indicated they need at least one week to return production to pre-strike levels.
MEMA is working with the White House administration to develop a plan to provide financial assistance for smaller suppliers, defined as less than $200 million in revenue, the organization said. The output of these suppliers, often Tier 2 or lower, is critical to the ongoing viability of the entire supply chain.
Another complication impacting the vehicle supply chain is the slowdown of commercial vehicle crossings at the U.S./Mexico border. MEMA recently co-led a meeting with the White House National Economic Council (NEC) and National Security Council (NSC) officials to address these border crossing delays. The group had two recommendations for the NEC and NSC:
- Expand the border crossing hours in the U.S. Customs and Border Protection (CBP) El Paso and Arizona regions to accommodate the additional trucks using these locations.
- Ensure the U.S. CBP coordinates with the Texas Department of Public Safety (DPS) to expedite truck crossings throughout the southwest U.S.
To date, Texas continues to inspect trucks coming across the Mexican border.
CANACAR, the leading trucking association in Mexico, reported transit times of 24 hours, leading to a record backlog of at least 19,000 trucks that have not been able to cross the border as of Oct. 8. The value of the merchandise that is stranded amounts to $1.9 billion dollars, which has already generated a serious impact on trade between Mexico and the United States, the organization said.
“We reiterate our call to the authorities of the Secretariats of Foreign Affairs and Economy to exhaust all diplomatic channels and spaces for dialogue to demand that the Texas government put an end to this measure, which, from our sector, we describe as absurd,” the CANACAR statement reads.
MEMA Original Equipment Suppliers will survey members about the labor and supply chain challenges each week and share critical information from the results.