Companies that supply parts to General Motors are being forced to idle plants and lay off workers, as a result of the national strike called by the United Auto Workers. Nearly 46,000 GM workers walked off the job last week after the UAW and GM were unable to agree on a new 4-year labor agreement. The strike is now the longest nationwide strike against GM since the 1970s.
By stopping all production at GM’s U.S. plants, the strike is also beginning to affect the web of manufacturers that produce parts that go into the company’s cars. With no vehicles being made, those companies can do little but wait until the strike ends. Every automotive assembly job impacts between 5 and 8 other jobs, reports The Wall Street Journal (Sept. 20, 2019). The companies most affected so far are those that operate on a “just-in-time” basis, delivering difficult-to-ship parts like seats and door panels to GM’s assembly plants from factories located nearby.
At least three companies around Lansing, Mich., have shut down their plants that supply the two GM assembly plants nearby. Already there are signs that the work stoppage is rippling beyond just those nearby plants and into the broader automotive supply chain. A typical finished vehicle is made from roughly 30,000 individual parts manufactured by hundreds of different companies, and companies that provide products to GM will themselves have networks of suppliers.
The strike is having cross-border implications as well. GM laid off 1,200 workers at an assembly plant in Oshawa, Ontario, on account of a shortage of necessary parts that would come from the company’s U.S. plants. In the U.S., given the importance of the automotive supply chain to the country’s Midwest, a prolonged strike of more than a month could have serious implications for the region’s economy.
Classroom discussion questions:
- What are the OM implications of a long strike?
- Which suppliers are most affected?