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It seems like only yesterday that we were creating a similar roadmap for suppliers to navigate through a 2019 GM strike. Today, the stakes are at the highest with U.S. automakers facing more challenges than ever, with electrification, a slew of product launches, risky battery plant capital investments, and geopolitical issues; the list goes on and on.
The strike deadline is just around the corner, set to expire at midnight on September 14th. The two sides seem worlds apart, with the United Auto Workers (UAW) seeking more than a 40% increase in wages and benefits. If the UAW were to succeed in its efforts, more union workforce reductions will take place, as the U.S. automakers will have no choice but to look at ways to compete through automation, and or outsourcing certain activities to other suppliers locally or globally. The big three U.S. automakers no longer hold the upper hand in market share. In fact, they are in for a fight for their long-term viability. You can argue that the automakers are reaping record profits, so they can afford to pay up, but the profits have been generated during the most unusual monetary policy in the history of the United States.
Record money supply following COVID led to historically high demand; at the same time, supply due to COVID and geopolitical forces were crushing the supply chain, creating a period of record profits on less volume. However, is this scenario likely to continue? Most likely not. We will and are returning somewhere closer to normalcy, and competition will get fierce.
A whole story could be told on the ramifications of the strike, but we will have to table that for another time. We need to focus on how suppliers can develop a defensive contingency plan and think about offensive tactics in the event of a strike. Hopefully, suppliers have tactical plans underway, but here are a few key points to consider for your planning purposes.
The path forward for suppliers will be a slippery slope, to say the least. What great companies do is plan, plan, and plan! Building a solid plan will help your company survive and thrive in an ever-changing automotive supplier market. Our automotive team at UHY will be monitoring the ongoing situation and has been helping our clients develop contingency plans and adjusting strategies to help mitigate some of the risks associated with industry volatility.
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