Navigating the UAW union strike

The backdrop to the Detroit Big Three negotiations with the UAW is heavily influenced by the OEMs’ transition to an electrified portfolio. Both sides have concerns: OEMs want their transition to be profitable, while the UAW wants to see workforce retention as manufacturing processes and products are simplified. During this period of change, suppliers should assess the alignment of their current product portfolio and manufacturing competencies with future market demand. To help you manage this product and production transition successfully, our industry experts are here to share forward-thinking insights. We can consult with you on options to address your market challenges today and in the future.

As Big Three production grinds to a halt during the strike, suppliers will likely experience excess inventory levels, excess labor, and idle equipment resulting from decreased demand. Even if you already have a roadmap in place to cope with this kind of disruption, our experts are here to provide additional support, wherever you need it most. For example, we can perform an inventory analysis and consult with you on different length-of-strike scenarios. Or we can collaborate with you to develop strategies for operational continuous improvement, supplier communication, or eventual ramp-up activities.

Wage increases at the OEMs could have ripple effects for Tier 1, 2, and 3 suppliers, such as cost-downs, labor shortages, or demands for higher wages within the workforce. In this environment, you could benefit from cost and margin intelligence to support and defend your decision-making. We can assist with updating your labor and overhead rates and applying those rates to product pricing.

In times of economic disruption, cash flow is always a top concern. But businesses could also face additional risk from potential covenant violations. If you need assistance navigating your cash, liquidity, and lending relationships during the strike, we’re here to support you. For example, we can develop 13-week cash flow plans to manage cash or perform a liquidity scenario analysis to better understand your liquidity or covenant concerns.

Depending on the length of the strike, you might consider a sale of part or all of your business to generate cash flow and liquidity. Or, perhaps you’re considering opportunities to acquire or invest in other suppliers, without the resources or sufficient capital to do so. In both cases, our affiliate P&M Corporate Finance (PMCF), an investment bank and registered broker-dealer, can offer strategic transaction advice. If you’re looking to sell, PMCF can determine your company’s current value, identify factors that could enhance or erode value, bridge gaps in value and market position, and identify the optimal time to go to market. For acquisitions, PMCF can assess feasibility, determine capital requirements, and formulate a fulsome approach strategy.

Uncertainty is a constant, but you might feel it more keenly during the strike. In our experience, the best antidote is easy access to actionable data, so that you’re always prepared to adapt. Our digital transformation and analytics teams are here to help you mine critical data from multiple sources to support your business decisions. And to go a step further, we can integrate industry forecast data with existing reporting tools, equipping you with additional ways to consider potential outcomes and compare scenarios. We can also collaborate with you to implement or optimize your use of smart manufacturing and technology, expanding your pool of data insights to strengthen your long-term future.