Ripple Effect From The GM, UAW Strike Bears Down On Supplier Firms

The longer it goes on, the more ripple effect the General Motors strike has on parts suppliers that make components for GM’s now-shuttered plants.

For example, Nexteer Automotive Corp., Auburn Hills, Mich., makes electric and hydraulic power-steering systems and other gear for GM, and several other automakers. The supplier company has warned its employees it might be forced to resort to layoffs if the GM strike continues.

Like other automotive suppliers, Nexteer is working to diversify its customer base so it’s not too dependent on any one customer or any one product. Still, GM represented the biggest portion of new bookings in Nexteer’s backlog, at 35%, as of Nexteer’s second-quarter report. Ford Motor Co. was a distant second, at 18%.

The GM strike began one minute before midnight Sunday night, Sept. 15. On Sept. 16, Nexteer gave its employees a heads-up it was “closely monitoring the situation for any potential impact it could have on Nexteer and our employees.” That’s according to a Facebook post on a page belonging to the United Automobile Workers local whose members include many of Nexteer’s employees.

Nexteer’s Dennis Hoeg, North America Division president, later said in a written statement, “… without an imminent resolution, Nexteer faces the difficult conclusion to temporarily reduce our workforce in the coming days due to the disruption in GM production.”

Hoeg added, “We will continue to monitor the situation and update our employees as we learn more. Our goal is to return to full production as quickly as possible.”

GM and the union formally opened negotiations on July 16.

Nexteer is a so-called Tier 1 supplier, which means it provides parts and systems directly to the manufacturer. But the ripple effect isn’t limited to Tier 1. There are Tier 2 suppliers who provide components to the Tier 1 suppliers, Tier 3 suppliers for Tier 2, and on and on.

Those lower-tier suppliers would be affected, too, if the strike continues.