General Motors’ stunning announcement in November that it planned to close up to five assembly plants in North America and slash its workforce hit the automotive industry hard and angered President Donald Trump.
According to reports, the 180,000 GM workforce is being reduced by 15 percent, resulting in a savings of $6 billion.
GM’s five North American plants employ nearly 7,000 workers, including 3,000 workers in Ontario. But GM has a contingency plan for workers laid off. Those workers laid off will be able to transfer to other plants.
Being able to transfer to factories who are adding jobs is a great deal for auto workers, but looking down the supply chain, this won’t be the case for the companies who make auto parts, drive trucks, work in warehouses and keep GM’s plants operating. They don’t have a safety net.
“There’s nowhere to transfer. They’ve got nowhere to go. They’re just out of work,” said Dave Green, a union leader near Youngstown where GM’s factory that makes the Chevrolet Cruze compact car will shut down in March. Jamestown Industries, a small operation that supplies front and rear bumper covers for the Cruze, is now frantically looking for new business to keep its company open.
“The idea is to add work in warehousing, logistics, and packaging outside of the automotive industry, said Lawrence Long, the company’s vice president of development, according to CTV News Canada.
“We’ve been lost in the shuffle,” said Brian Shina, who lost his supplier plant job when GM cut a shift at its Lordstown factory in May, months before announcing plans in November to close it. “We don’t have any leverage here.”
The Domino effect has started
Dave Green says the dominoes are already starting to fall. One company that makes seats for the Cruze and another company that does logistics and warehousing work for GM in Ohio will be closing in March. Three years ago, the two companies employed 800 workers between them.
Green has a list he has compiled of over 50 companies whose work is directly tied to the GM assembly plant in Ohio. There is no way, yet, to determine how many jobs in these companies will be impacted by the Ohio plant closure. However, some economists say that for every one auto plant job lost – there are three or four positions in the supply chain eliminated.
According to research, auto plants and manufacturing businesses generally create more spin-off industries than any other businesses. “That’s the bigger part of this,” said Green, according to Market Watch.
Albert J. Sumell, an economics professor at Youngstown State University says, Suppliers closest to factories that end up shutting down tend to be hit hardest because they’re usually more dependent on those plants than those farther removed with a broader customer base,
In Canada, workers at an auto parts plant in Whitby, Ontario, walked off the job in protest of GM’s announcement of the Canadian plant closing. Another auto parts plant nearby has already announced it will be closing.
The takeaway from this news is simply this: Businesses today do not stand alone as individual entities. They are all connected in varying ways to a national, even global supply chain. This means that anything affecting one business will have a domino effect.
