Josh Rubin, Toronto Star
Oct. 3, 2019
As the U.S. strike against General Motors continues, Canadian auto parts companies are losing millions of dollars and some could even go out of business, industry experts warn.
“There are going to be some suppliers who count on GM that could just disappear,” said Canadian automotive industry analyst Dennis Desrosiers Thursday, as the strike by the United Auto Workers nears the end of its third week.
Shares of Guelph-based parts supplier Linamar plunged Thursday after the company said the strike was costing it $1 million per day. By 2:30 p.m., Linamar shares were down more than 10 per cent on the day, falling $4.24 to $36.73 per share.
In a statement, late Wednesday, Linamar took a direct shot at smaller rivals who are more dependent on GM: “On the plus side we are seeing more in the way of conquest or takeover business due to failing suppliers that will positively impact future sales, a key advantage for Linamar thanks to our rapid response capabilities and flexible equipment philosophy.”
Linamar is likely one of the suppliers better positioned to withstand a long strike, Desrosiers said, because it’s relatively well diversified, as is Aurora-based parts giant Magna.
“The smaller ones don’t tend to be quite as diversified in terms of their customers. Linamar can come in and say ‘we’ll be your fixit,’” said Desrosiers.
“While we attempted to keep our employees at these impacted plants working as long as possible through training, maintenance and inventory, a few of our GM-dedicated plants are now idle,” said Magna spokesperson Scott Worden in an email. “We are continuing to monitor the situation and we remain hopeful for an amicable resolution.”
The head of the auto part’s industry’s trade association said the length of the strike has caught many of his member companies off-guard.
“Everyone expected it to be over in a day or two,” said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.
Volpe estimates that 100,000 Canadians are directly employed in the parts industry, with roughly 10,000 of them working for companies who deal with GM.
Some parts industry workers are already feeling the pinch from fewer shifts. Even if the companies they work for can ramp up production once the strike is over, they’ve still got mortgage payments or other expenses to pay in the meantime, Volpe said.
“The deeper issue right now is at the personal level. If this goes on much longer, people might need to look around for other work, at least until it’s over,” Volpe said.
Still, while some production can be shifted forward until after the strike is over, it might not be 100 per cent.
The strike has already cost GM more than $1 billion (U.S.), according to an estimate from Morgan Stanley.
GM’s latest bid for a four-year labour deal fell short on job security, health care benefits, wages and how to manage temporary workers and skilled trades employees, the letter said. The union made a counter proposal and is waiting for GM’s response.