Expert: Prolonged UAW strike could bankrupt some suppliers
(CBS DETROIT) - As the United Auto Workers strike continues, there is a growing concern the automotive supply chain could be affected financially.
"That's the big question, isn't it? How long will the tier two supply base survive a prolonged strike?" said Jan Griffiths, the founder of Gravitas Detroit.
Griffiths worked in supply chain management for more than three decades as a C-suite executive.
Griffiths is very familiar with the effects a labor strike can have on Tier 2 suppliers.
Additionally, she said that the sector of the supply chain is still feeling the effects of the pandemic.
"The Tier 2 supply base has not fully recovered from COVID, from the chip crisis, and now they're faced with wage increases of their own, so for them to go to the bank and borrow more money and weather this storm, that's a problem because interest rates are higher," Griffiths said.
Tier 2 suppliers are usually smaller companies than Tier 1 suppliers like Lear Corporation and American Axle, so they do not typically have the financial strength of those larger companies.
Griffiths said it's important for those Tier 2 suppliers to be transparent about their financials with the automakers in order to prevent potential bankruptcies and even more job loss.
"All the information coming into me is somewhere from three to six weeks. That is a massive generalization, of course," Griffiths said.
If a deal doesn't get done soon, Griffiths insisted that it's only a matter of time before companies start going bankrupt.
"No one really knows who will be first, will there be bankruptcies, yes probably, how many and when we don't know yet, but it's coming with a prolonged strike," Griffiths said.