Navigating the UAW union strike

Pragmatic guidance for decisive action

The United Auto Workers (UAW) union strike against General Motors, Ford Motor Company, and Stellantis is, in many respects, unprecedented. While past UAW strikes have traditionally targeted one OEM at a time for negotiations, the current strike against the Big Three simultaneously is a game changer. As a result, Tier 1, 2, and 3 automotive suppliers could feel larger impacts in the near and longer term compared to prior strikes. And this time, the industry’s ongoing EV transformation is also at stake: will transition timelines be put in jeopardy, and what will this mean for the marketplace, regulatory compliance, and financial risk?

No one truly knows what the future holds: when the strike will end, what the negotiated terms will ultimately include, and what the effects will be for the mobility industry and supply chain at large. Predicting the future can be a valuable exercise, but predictions aren’t the only thing you might need right now. If that’s true for your organization, and you want to talk through your concerns and plans with a professional advisor, our team is ready to connect — and help you act with confidence.

Potential challenges you might face and how we can advise you along the way

Many automotive suppliers already have response plans in place for scenarios like this one. But depending on the length of the strike, even the most prepared organizations could benefit from extra support, especially if they need to adapt more than expected. If your business is strained by any of the following challenges, contact us. Our subject matter experts will follow up with you directly to discuss your needs in greater detail.
Product disruptions amid EV transition

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.

Dramatic shifts in supply & demand

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.

Labor costs & shortages

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.

Cash flow & liquidity challenges

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.

Navigating difficult transactions

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.

Insufficient real-time data for decision-making

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.

Our team is ready to help

Our automotive experts are here and ready to help guide you through any questions you may have as you navigate the UAW strike. We are available to be a sounding board, offer guidance, and help you act with confidence. Please reach out directly to the team or fill out the contact form below and someone will be in touch shortly.

Contact us for support

Let us know which challenge is most relevant for your business, and we’ll connect you to the right consulting expert.