After years of instability and uncertainty, this summer, supply chains finally seemed to get back on track. Inventories increased, shipping delays subsided and employers rehired staff. But about a week ago, the United Auto Workers — the labor union that staffs the Detroit Three — went on strike. It’s the first time there’s been a strike against Ford, GM and Stellantis (the parent company of Jeep and Chrysler) at the same time.
NPR reports that the strikes, which initially occurred at targeted plants, will extend to the other facilities in the region. There are already 12,700 workers on the picket lines, but more will join if the automakers don’t make negotiation progress and demonstrate good-faith bargaining.
Most reasons for the strike are typical and include disagreements over wages, pensions and the length of the workweek. But another goal deals with temporary workers; the union wants temps to earn higher wages and have a faster pathway to full-time employment, job security and better benefits, The Wall Street Journal reports. Union leaders argue that different employment statuses create inequity in the assembly line, “with one worker making a much higher wage than another for doing the same work.”
The implications for a prolonged strike go beyond layoffs, though at least 600 people have been dismissed at the Ford plant alone. Supply chain implications are extensive and could leave smaller tier 2 and 3 suppliers filing for bankruptcy because so many other jobs and industries depend on the healthy functioning of automotive. The president of the American Trucking Associations stated: “The U.S. auto industry is a significant contributor to the nation’s freight economy. Trucks move more than $950 billion worth of cars, trucks and parts. That’s hundreds of millions of tons of freight that are subject to disruption if this dispute continues.”
A Fox News report echoes these concerns: “It’s the smaller companies that might lay off workers in a major ripple effect,” says Jan Griffiths, an automotive analyst for mid-Michigan supplier CIE Newcor, which just announced plans to lay off nearly 300 workers due to the strike. "When you’re in a situation like this as a tier 2 supplier … you've got cash coming in for a few more weeks from the products you’ve already made, but if you’re not producing right now because of the strike, then there’s no cash coming."
She says many other small suppliers will follow suit if a deal is not reached soon. "They’re fragile right now because they’ve just recovered from COVID barely, the chip crisis … They’ve had to deal with wage increases, transportation increases, utility increases, raw material increases."
We’ve already witnessed the implications of understaffing in the logistics and distribution industry. As I noted on CBS News, when the Teamsters union at UPS threatened to strike, there just aren’t enough workers to account for the number of packages that are delivered. And when quoted in Bloomberg I added, “The nearshoring of supply chains requires more domestic workers in freight, logistics and transportation. Yet, we have a shortage of drivers and warehouse workers as well as limited warehouse space.”
Plus, under normal circumstances, automakers could prepare for a strike by packing warehouses, but they’re already mostly full. “In a perfect world where we didn’t have all the disruptions already, you may be able to extend the ability to produce beyond the four-to-six weeks. But right now, that looks fairly tight,” I recently explained in Supply Chain 24/7.
Futureproofing in logistics and transportation
Aside from fulfilling the requests of the striking workers, the automakers in this situation don’t have many ways forward to ensure their networks remain healthy and active into the future. But as a supply chain professional, you are empowered to prepare yourself — and your organization — for uncertainty. Get certified in logistics, transportation and distribution with ASCM’s CLTD designation. You can choose self-study, instructor-led or instructor-supported options — so no matter your learning preferences, you’ll find a system that works for you. Now’s the time to confirm your understanding of these essential topics while becoming a true leader in the field.
