GM Layoffs 2019: Hundreds Laid Off As GM Strike Continues

Collateral damage from the ongoing nationwide strike at General Motors Company (GM) is seeing the layoff of hundreds of employees at supplier companies located in the United States that are part of GM's supply chain.

GM employees affiliated with the United Autoworkers Union (UAW) struck on Sept. 17 to demand job protection, higher pay and saving GM plants in the U.S. and Canada scheduled to be closed in 2020. Close to 50,000 GM employees are currently picketing company factories and offices throughout the U.S.

Hundreds of employees at Android Industries and Nexteer Automotive, both of which are GM suppliers located in Michigan, have been temporarily furloughed. Android Industries makes instrument panels while Nexteer makes steering systems for GM.

In addition, GM on Monday laid-off at least 1,200 employees at companies it jointly operates with other firms. More than 500 hourly employees at the jointly operated DMax engine facility in Moraine, Ohio have been laid-off. This plant produces engines for GMC Sierra and Chevrolet Silverado pickup trucks.

Motor vehicle asssembly plants such as GM's use "just-in-time" production methods. This efficient system means workers make parts for vehicles as these vehicles are being assembled in real time. Once vehicle assembly stops, as in the case of a strike, the impact is immediately felt among companies are part of GM's extensive supply chain.

"After you get through the first week, the suppliers and then the suppliers' suppliers start shutting down," said Patrick Anderson, principal and CEO of Anderson Economic Group (AEG). Located in East Lansing, Michigan, AEG is a boutique consulting firm specializing in public policy, business valuation and industry analysis.

Anderson also said electricians and truckers that haul GM vehicles from plants to dealerships will eventually be affected by the strike. He estimated GM's initial daily losses due to the strike at $2 million. GM’s total losses for the first week of the strike likely amounted to $25 million.

"It's not just about GM workers -- it's all the suppliers that work with GM to put stuff in the car, and other vendors that GM has," noted Tendayi Kapfidze, chief economist at Lending Tree, to CBS MoneyWatch. Lending Tree is the largest online lending marketplace in the U.S.

Other analysts estimate the strike might cost GM anywhere from $50 million to $100 million per day in lost production. They believe a prolonged strike will take out 10 cents from GM’s earnings per share during the third quarter.

“From a bottom line standpoint, the impact could potentially be nominal if the strike is resolved quickly; yet, the longer it lasts, the more it will be felt in GM’s earnings profile,” according to Credit Suisse’s Dan Levy.

Strikers will start feeling the financial pain from the strike as early as next week. Strike pay is $250 per week, but won't be distributed until the 15th day of picketing. Hourly GM employees received their paychecks from GM for the previous week's work on Friday.