Detroit-based seating supplier LM Manufacturing has temporarily laid off 650 workers due to the UAW strike shutting down its customer.
The company, a joint venture between Canadian auto supply giant Magna International Inc. and minority-owned LAN Manufacturing, made the move in response to a work stoppage Friday that has halted production of Ford Motor Co.’s Bronco, among various other makes and models by the Detroit 3.
Magna spokeswoman Tracy Fuerst confirmed the temporary layoffs began Wednesday. Production at LM Manufacturing’s new plant launched just a few months ago after completion of an $18 million build-out at the Bedrock-owned, former Sakthi Automotive site in southwest Detroit. Fuerst said the company is not offering to supplement unemployment benefits and plans to bring back employees once production resumes.
The company had been competing with crosstown competitor Lear Corp. and other suppliers for employees. The tight labor market contributed to general production woes coming out of the COVID-19 pandemic, and industry observers predict suppliers could have a tough time rehiring employees after the strike. Crain’s inquired with Magna about its strategy to bring back employees.
LM Manufacturing is the latest supplier to announce layoffs as the impact of the walkout at three automaker plants ripples through the supply chain.
The UAW launched a strike Friday on Ford’s Michigan Assembly plant in Wayne, Stellantis NV’s Toledo Assembly Complex just across the Ohio border and General Motors’ Wentzville Assembly plant near St. Louis. UAW President Shawn Fain said earlier this week that the strike would expand this Friday if no progress is made in negotiations.
Michigan-based parts maker CIE Newcor said it plans to lay off nearly 300 employees if it temporarily closes four company plants due to the strikes, according to a Worker Adjustment and Retraining Notification, or WARN notice, sent to the state and made public earlier this week.
Suppliers up and down the food chain are in a vulnerable position after two years of supply chain volatility, eroded margins and unpredictable production schedules. Larger tier one suppliers, such as Magna, have more of a financial cushion than the hundreds of small, sub-tier suppliers considered the most at risk from a prolonged strike.
Parts makers for the Detroit 3 stand to lose $38 billion of revenue if the strike expands, according to a Bloomberg estimate. Auburn Hills-based Nexteer Automotive, Southfield-based ABC Technologies, Detroit-based American Axle & Manufacturing, Lear and Magna are among the most exposed.
Chuck Dardas, CEO of Livonia-based AlphaUSA, said last week that the impact could already be felt at his small Tier 1 supplier, which sells metal fasteners to the Detroit 3. He said Tuesday that the fallout is spreading.
“Releases are starting to slowly ebb,” Dardas said by email. “Of course Michigan Assembly and Toledo releases have stopped.”