Strike hinders parts suppliers

Packard production is likely
to be cut back at any time.

STAFF/WIRE REPORT

WASHINGTON (AP) — The United Auto Workers’ strike against General Motors Corp. presents more challenges for auto parts suppliers, which have struggled with bankruptcies and increased competition in recent years.

The impact will largely depend on the length of the work stoppage and the degree of the individual companies’ ties to GM. But analysts said it will quickly ripple through the industry.

“Every car that’s not built means there’s 10,000 components that don’t get sold and don’t get put on the car,” said Neil De Koker, president of the Original Equipment Suppliers Association, an industry trade group.

De Koker said the timing would be key: “If it’s four or five days it won’t be nearly as traumatic as four to five weeks.”

Several suppliers have strong links to GM, including American Axle & Manufacturing Holdings Inc., Magna International Inc., Lear Corp. and Delphi Corp., which was spun off from GM into a separate company in 1999.

In the Valley

In the Mahoning Valley, several hundred workers are out of work at plants that supply GM’s Lordstown plant. Among them are Intier, which produces seats; Lear, which makes headliners; and Jamestown Industries, which makes front-end parts.

The strike also threatens to have an impact on local operations of Delphi Packard Electric, which has 1,000 hourly employees in the area.

Mike O’Donnell, shop chairman of International Union of Electrical Workers Local 717 in Warren, said the local plants operated at full production Tuesday, but cutbacks are expected any day. Operations won’t be totally shut down, however, because Packard supplies components for wiring systems to other automakers besides GM, he said.

Craig Fitzgerald, a partner and auto analyst at Southfield, Mich.-based Plante & Moran PLLC, said the major suppliers would be able to weather a 10-day strike “very well,” but it would have a negative impact on sales and earnings.

Prepared

“Big Tier 1 [suppliers] have been very mindful that a strike could happen and they’ve been preparing for this for six to nine months,” Fitzgerald said.

American Axle & Manufacturing, for example, is the main supplier of driveline components to GM for rear-wheel-drive trucks and sport utility vehicles built in North America. Sales to GM accounted for more than three-fourths of American Axle’s total net sales in the first half of 2007.

Renee Rogers, an American Axle & Manufacturing spokeswoman, said the supplier would “support our customers with whatever they need.” She declined to elaborate on the company’s preparations for a GM strike.

Magna International, which produces pickup truck frames for GM, said in a statement that depending on the length of the strike, the company “may be required to suspend the supply of parts to General Motors.”