Crain’s Detroit Business
Oct. 13, 2023
Kurt Nagl
The United Auto Workers’ intensifying strike against the Detroit 3 automakers and uncertainty clouding the industry transition to electric vehicles has put a damper on economic development as car companies and suppliers rein in spending and reevaluate projects.
Ford Motor Co.’s pause of a $3.5 billion electric vehicle battery plant in Marshall stunned officials last month, but the Dearborn-based automaker isn’t the only one pumping the brakes on business deals amid union negotiations.
Automotive companies at every level from OEMs to sub-tier parts makers have stopped or significantly curtailed non-necessary spending, according to several impacted companies and industry observers, as the financial toll of the union’s growing work stoppage reverberates through the supply chain. Executives began shoring up their rainy day funds months in advance of the labor contract deadline Sept. 14, said Greg DeGrazia, principal at Detroit-based Miller Canfield, whose practice focuses on intellectual property in automotive and manufacturing.
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All auto suppliers are taking similar measures, said Glenn Stevens, executive director of MICHauto. “They are taking pretty dramatic steps because they have business plans to meet without the revenue,” he said. “There’s so much uncertainty about what might happen next. The short-term right now for suppliers is really a freeze on all discretionary spending and certainly on big projects pending. It’s a bit of a paralysis.”
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The hope is that once the labor dispute is resolved, projects will pick up where they left off, Stevens said, though the longer the strike goes, the more severe the fallout.
“Right now, the hope is that we’re not too far away from agreements being made and the damage doesn’t spread too far,” Stevens said a day before Ford’s surprise walkout in Kentucky.