A Magna International Inc. joint venture in Michigan has laid off 650 employees as the automotive industry braces for widening strikes by the United Auto Workers union in the United States.
LM Manufacturing LLC, 49 per cent owned by Magna, supplies seats to Ford Motor Co.’s F-N Bronco factory near Detroit, where workers went on strike last week. UAW members are also on strike at two other U.S. factories, owned by Stellantis NV STLA-N and General Motors Co. GM-N, as the union pushes for new collective agreements.
The UAW is seeking 40-per-cent raises, a four-day workweek and the end to two-tier wage scales for new hires. The auto companies are resisting the demands as too rich, even as they post robust profits and spend heavily to produce electric vehicles.
On Sept. 15, workers walked out of Stellantis’ Jeep factory in Toledo, Ohio, and GM’s Chevrolet Colorado assembly line in Wentzville, Mo. About 12,700 of the 146,000 UAW members who work at the Big Three automakers are on strike. The UAW says it will shut down more plants by noon ET on Friday if no progress is made at the bargaining tables.
As the strikes disrupt the supply lines, GM on Wednesday closed a plant in Kansas and laid off 2,000 workers because of a lack of parts from its Wentzville factory. Stellantis laid off 370 workers at three parts factories in Indiana and Ohio that supply the Jeep assembly line in Toledo.
Dave Niemiec, a spokesman for Aurora, Ont.-based Magna, said the layoffs at LM in Detroit are temporary, and said it is too soon to say if other Magna operations are affected. “We have focused considerable attention on contingency planning to pro-actively address any temporary business disruptions to our operations,” he said. “If that time comes, we are prepared in terms of temporarily scaling back production on affected programs as efficiently as possible, while being equally prepared to ramp up quickly when ready.”
Flavio Volpe, head of the Automotive Parts Manufacturers’ Association, said the U.S. strike is affecting some suppliers he represents in Ontario. There are about 12 companies in Ontario that directly supply the three plants on strike, he said, and this number could grow if the strikes spread.
“Next week’s production schedules for affected companies are going to be hairy,” Mr. Volpe said, declining to name the companies in Ontario. Linamar Corp. and Martinrea International Inc., Ontario-based parts makers with large U.S. operations, did not respond to requests for comment.
In Ontario, the plants operated by the Big Three are not yet affected by the U.S. strike.
Ford and the Unifor union that represents 5,680 of its workers in Canada reached a tentative agreement on Tuesday. The deal averted a strike at Ford’s factories in Oakville and Windsor, and parts warehouses. The agreement, expected to be put to a ratification vote this weekend, will set the template for Unifor’s negotiations with Stellantis and GM in Canada.
UAW workers are expected to rally at one of Ford’s two Louisville, Ky., assembly plants on Thursday evening in support of workers striking at other plants.
The city is home to a Ford assembly plant and its Kentucky truck plant. Ford chief executive officer Jim Farley has previously said the Kentucky truck plant, which assembles F-Series pickup trucks, is the company’s most profitable plant globally. Ford’s plant in Windsor makes engines for F-Series trucks.
Analysts expect plants that build high-margin pickups, such as Ford’s F-150, GM’s Chevy Silverado and Stellantis’ Ram, to be the next targets if the UAW walkout continues. Morgan Stanley analyst Adam Jonas estimated in a Thursday research note that a full month of lost production would cost the three automakers US$7-billion to US$8-billion in lost profits.
With files from Reuters