Nearly 80% of Detroit Big Three suppliers are concerned about the financial viability of their sub-suppliers
Southfield, Mich.—The most recent survey from MEMA Original Equipment Suppliers reveals the impact on the vehicle supply base from the ongoing strike between the UAW and Detroit’s Big Three manufacturers. Vehicle suppliers employ over 900,000 workers, over six times more than the 146,000 UAW Detroit Three autoworkers. Additionally, suppliers contribute 2.5% of the U.S. Gross Domestic Product (GDP) and operate in all 50 states.
The survey, collected from October 9 – 11, 2023, revealed:
- Layoffs have increased by nearly 10% week-over-week with 39% of surveyed vehicle suppliers now having laid off a portion of their direct labor employees.
- Of the suppliers who have not begun layoffs, half indicated they will begin laying off direct employees the week of October 30.
- Over 30% of suppliers surveyed indicate that they will need more than one week and up to over three weeks to ramp-up idled production; the greatest challenges to restarting operations are returning labor and material availability.
- Nearly 80% of suppliers are concerned about the financial viability of their sub-suppliers, while 30% of these suppliers express some concern regarding their internal financial viability.
MEMA continues to assert the importance of federal action to support the essential U.S. supplier base and to work with the White House to develop a plan to provide financial assistance for smaller suppliers. The output of these suppliers, often Tier 2 or lower, is critical to the ongoing viability of the entire supply chain.
MEMA recommends the federal government immediately initiate:
- A scalable low-cost loan/grant program to ensure suppliers have enough capital on hand to sustain their business during this crisis.
- Establish an emergency training program enabling suppliers to retain their workforce during the strike and equipping them with new skills needed for future transformative manufacturing.
- Reduce the minimum project amount of the domestic manufacturing conversion grant program (IRA) from $50 million to $10 million to be more inclusive of the entire vehicle supply chain.
MEMA Original Equipment Suppliers will continue to survey vehicle suppliers each week and share critical information from the results.
This survey was conducted October 9-11, 2023, via email to 524 MEMA Original Equipment Suppliers members. There were 54 respondents.
For additional information and comments, contact Megan Gardner, firstname.lastname@example.org, 919-636-2941.