In a prior Supply Chain Matters commentary, we alerted to our belief that North America Automotive Supply Chains Should Prepare for Longer-Term Disruption. As the work stoppage involving all General Motors U.S. manufacturing facilities enters day 16, automotive supply networks that extend across North America have indeed felt the effects of the production disruption. Chevrolet Bolt Electric Car

The Wall Street Journal reported today that the GM truck assembly factory in Silao, Mexico has now been idled because of the rippling parts shortage. This plant produced Chevrolet Silverado and GMC Sierra pickup trucks. GM has reportedly laid off an additional 6000 workers at the truck assembly facility including a nearby transmission production facility.

This development was noted as significant since the supply of GM’s most-profitable vehicles, pick-up trucks and SUV’s are now impacted. That may not have immediate impact because GM dealers remain bloated with vehicle inventories. The report indicates that GM entered September with over 200,000 Silverado’s and 78,000 GMC Sierras on dealer lots.

Reports of customers being frustrated by shortages of available repair parts have also surfaced since GM’s parts warehouses have been impacted by the work stoppage.

The WSJ cited a J.P. Morgan estimate that the overall impact on GM alone to be at roughly $1 billion thus far. That likely does not include impacts among suppliers.

Along with the 30 GM factories across the U.S. that are now idled, associated supply networks are increasingly being financially impacted included cascading layoffs.

The United Auto Workers lead contract negotiator told labor union members that GM made a comprehensive proposal on Monday night with the labor union responding with a counterproposal.

Reports continue to indicate that use of temporary workers and keeping idle plants open have been among the major bargaining issues.

The WSJ additionally reported earlier this week that for the very first time, GM may be willing to entertain unionized workers at a proposed new electric battery manufacturing facility near Lordstown Ohio in a new contract but that remains to be seen. That has relevance in the light of our prior observations relative to the new realities of electric vehicle manufacturing resource needs.


Added Takeaways

One would anticipate that the longest GM manufacturing and supply network disruption since 1970 will soon come to resolution. Then again, the stakes are high for both GM, its suppliers and unionized workers.

Once an agreement is reached, the focus turns to others of the U.S. Big Three auto manufacturers and the notions of added disruption remain.


© Copyright 2019, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.