Josh Rubin, Toronto Star
Sept. 16, 2019
As a strike by U.S. workers costs General Motors millions of dollars a day, executives and workers in Canada’s auto parts industry are also bracing for impact.
“Like the entire supply base, we are in wait-and-see mode,” said Scott Worden, spokesperson at Aurora-based parts maker Magna International after the United Auto Workers began a strike against GM Monday. “We would like to see both sides get back to the negotiating table, working towards an agreement.”
(JAKE MAY / AP)
There have been no layoffs or shift changes at Magna yet.
“Although Magna supplies GM on a number of programs globally, it would be premature to comment on the potential impact to our operations right now,” Worden said.
Unlike auto manufacturers, who typically have a few weeks’ worth of inventory on-hand, parts suppliers have just a few days’ worth.
“You could see this impacting some of the smaller parts suppliers as soon as today,” said Dennis DesRosiers, of DesRosiers Automotive Consultants.
The vast majority of auto parts produced in Canada end up in cars manufactured in the U.S., said DesRosiers, who estimated roughly 74,000 Canadians work in the parts supply industry.
“The parts suppliers will feel this very, very quickly,” agreed Tyson Jominy, vice-president at J.D. Power’s Power Information Network and a long-time auto industry analyst and forecaster.
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, is optimistic a resolution will come soon.
“One day, two days, you can readjust your production schedules, you can bounce around your operations; three days, four days, it starts affecting people’s shifts,” Volpe said.
At GM’s assembly plant in Oshawa — where production is scheduled to close down at the end of this year — some parts are supplied by the company’s U.S. operations, raising the prospect of temporary layoffs once the existing stock of parts runs out. GM Canada spokesperson Jennifer Wright said there’s no impact on Canadian operations — yet.
“GM Canada’s plants are part of an integrated North American manufacturing supply chain. We will continue to monitor the situation closely for any impact to our Canadian operations,” said Wright, adding that the company wouldn’t comment on the negotiations.
The United Auto Workers’ first strike against GM in 12 years began at midnight, with 46,000 employees staging a walk out. Two of GM Canada’s plants — Oshawa and St. Catharines — rely on parts from the U.S. and could see jobs being hit as early as this week, said Jerry Dias, national president for Unifor, the Canadian union.
“There will be temporary layoffs in all three facilities as the parts start to dry up,” Dias told Bloomberg. “It could hit about a couple of thousand jobs.”
The UAW is fighting over jobs and benefits, including better health care and the length of time it takes for shorter-tenured members to get top-scale pay. The strike could cost GM about $50 million a day in earnings before interest and taxes due to lost production, Dan Levy, an analyst at Credit Suisse, said Sunday.
J.D. Power’s Jominy suggested GM will start to feel a bigger crunch if the strike lasts much longer than two weeks.
“My expectation is that this will be a very minor disruption, but they could go two weeks, based on the inventory they have,” said Jominy, adding that the UAW chose their contract target wisely. They also timed it well.
“They’re the strongest of the big three, financially, so GM is a good choice for UAW to target. Business is good, so if you’re the UAW, this is a good time to strike,” Jominy said.