General Motors strike in U.S. could cost Ontario firm Linamar up to $1M a day
TORONTO As a strike at General Motors Co. in the United States continues in its third week, the impact on Canadian companies dependent on the auto industry is increasing.
No more so than Linamar Corp., Canada’s second largest autoparts manufacturer, which said it expects to lose up to $1 million every day of the strike.
That means the Guelph, Ont. company ’s bottom line has already taken a hit of up to $18 million since about 49,000 United Auto Workers went on strike since Sept. 16, resulting in manufacturing stoppages across the continent’s deeply integrated supply chain.
“The resulting decline in GM orders are currently estimated to impact Linamar earnings at a rate of up to $1 million Cad/day of strike,” Linamar stated in an investor update on market conditions that have changed since it last released financial results in August.
Linamar’s stock fell more than 10 per cent on Thursday to close at $36.74 on the Toronto Stock Exchange.
GM is Linamar’s second largest customer, chief executive Linda Hasenfratz said in an email. Her company supplies a wide range of components and systems to GM for “nearly every vehicle produced in North America.”
Linamar did not disclose details about production cuts or how many employees have been affected because the number changes as it reallocates work. “We have had to layoff some people but are reallocating them into other lines needing people as best we can,” Hasenfratz said.
In its statement to investors, Linamar noted the potential opportunity to buy up other suppliers that are struggling with the expected downturn in global light vehicle production.
Talks between negotiators for the UAW and General Motors continue, with no word on a deal.
Other Canadian autoparts suppliers are also feeling the crunch from the work stoppages in the U.S., where workers are fighting for better health care and wages. The conflict, which Citi Group Inc. analyst Itay Michaeli estimates could cost GM $100 million per day, comes at a transitional time for the automaker. GM is cutting back some vehicle production, including one plant in Canada and four in the U.S., to invest instead in automation and electrification.
Nearly 5,000 Canadian workers have been temporarily laid off during the disruption, including the majority of workers at GM’S Ontario plants in Oshawa and St. Catharines and an additional 1,700 workers at autoparts suppliers, according to national union Unifor.
Aurora, Ont.-based Magna International Inc., North America’s largest autoparts supplier, has also had to idle a few plants because of the strike, although it is not releasing details about production cuts, layoffs or costs.
“While we attempted to keep our employees at these impacted plants working as long as possible through training, maintenance and inventory, a few of our GM dedicated plants are now idle,” spokeswoman Tracy Fuerst said in an email.
“We are continuing to monitor the situation and we remain hopeful for an amicable resolution.”
The stoppages are frustrating for autoparts suppliers that aren’t at the negotiating table and therefore have no control over a resolution, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association.
“The reality is if somebody’s not making a car, they’re not going to take delivery of your seat. If you can’t send the seat, you’re not buying the foam or the springs, and it just trickles all the way down,” Volpe said.
Auto parts suppliers employ about 100,000 people in Canada, with about 10,000 working in firms that supply GM, Volpe said. No one is solely supplying GM, he said, so workers can be reassigned to different jobs or upkeep.