US autoworkers strike and the ripple effect for fleet managers
Although the United Auto Workers (UAW) strike against Detroit's Big Three (Ford, General Motors, and Stellantis) in the United States looks like it may be showing signs of an agreement, the likelihood of supply chain shortages owing to layoffs and production disruptions for both vehicle manufacturers and auto parts factories is something fleet managers need to keep on top of.
While strikes against the Big Three idled production lines at five assembly plants, it has been expanded to 38 parts and distribution facilities in 20 states owned by GM and Stellantis, not hitting Ford distribution facilities due to positive signs in negotiations.
Regardless of the outcome, fleet managers must remember to diversify their fleet as they can no longer rely on one OEM supplier or to even say upfitters. “Do not put all your eggs in one basket,” fleet management consultant Phil Schrieber told Global Fleet.
Regarding the strike, larger companies should be able to weather the situation, but smaller ones may see difficulty as they are trying to get back on their feet following recent disruptions from the COVID Pandemic and semiconductor chip shortages and the current situation of high interest rates and tougher borrowing conditions.
Although the situation is changing every day and the strike could come to full stop soon, auto supply chains could feel lingering impacts despite the halt. Without parts, cars cannot be fixed, and this impacts the bottom line for fleet operators, so they need to prepare themselves for a possible ripple effect.
As many fleet managers are forced to extend the life of their fleet vehicles, they need to be very critical with vehicle selection. They cannot waste money on a vehicle that has constant issues, and they need to know when to say goodbye, according to the consultant.
Remember to maintain communication with your suppliers. Ask them to inform you about the situation they are facing and to give you an idea of how fast a ramp up will occur once things get back online. It will all depend on order backups, the availability of raw materials, labor planning, and many other things.
And plan ahead. There are some things that are out of your control but forecasting next steps to mitigate risks can be accomplished with the help of due diligence and communication with your team as well as your suppliers. One issue to keep an eye on today, according to Mr. Schrieber (pictured left), is the lack of small vans in the US market.
“You need to think outside the box. As for us, with the help of end users, we created a small van substitute vehicle which checked most of our requirement boxes. Just remember that flexibility is the name of the game,” said Mr. Schrieber, a 35-year veteran in the industry who retired as the North America fleet manager for the Otis Elevator Company after 18+ years with the firm.