Navigating Strikes | The Future of the Industry
The deadline for a potential worker strike by the United Auto Workers (UAW) is this Thursday, September 14th. Right now, the United Auto Workers (UAW) are in discussions with the Detroit Three automakers, namely Ford Motor, Stellantis (the parent company of Chrysler), and General Motors. These talks are happening because the current four-year labor agreements, which cover 146,000 workers, are set to expire on September 14th. It’s worth noting that these three automakers account for roughly 40% of light vehicle auto sales in the United States. According to estimates from IHS Markit, if a strike were to occur, it could disrupt vehicle production in North America by as much as 75%, as reported by J.P. Morgan. Today I’ll aim to answer some of the most frequently asked questions among dealers and parts managers, share our personal experience with strikes, and explore other things parts managers should keep in mind as they navigate strikes.
Should Parts Managers stock up on parts?
When there’s a chance of a worker strike, it’s a good idea for parts managers to think about keeping extra parts on hand, especially fast-moving ones. This way, they can keep things running smoothly even if there’s a work stoppage. To strike the right balance, it’s essential to assess your parts inventory carefully. Maintaining a 60-90 day supply of fast-moving parts is the best goal for uncertain times. To calculate your 90 day supply, take your monthly sales average and multiply it by three. However, it’s important not to go overboard, as having too many parts can tie up valuable resources and storage space. Conversely, having too few can lead to lost sales. Analyze which parts are in high demand and how long it takes to restock them. By doing so, you can set aside a reasonable amount that matches both your operational needs and budget, striking a prudent balance between readiness and efficiency.
Deciding how much to stock
Figuring out how many parts to stock takes some homework. You’ll want to look at how many of each part you usually use and how long it takes to get more. Be sure to look into your manufacturer policies and whether they allow you to increase ASR-guaranteed parts, in the case of overstocking. Think about whether certain times of the year are busier or slower for your business and plan accordingly. Consider any special equipment and the trustworthiness of your suppliers. Ensure your DMS is properly set up, so the reporting you generate is accurate. This way, you can make informed decisions about your parts inventory and potential adjustments, especially if you have the option to increase ASR-guaranteed parts when overstocked.
How long can strikes last?
The length of strikes varies quite a bit. Some get sorted out pretty quickly, while others can drag on for a long time. It depends on how big the strike is and who’s involved. It’s a good idea to be ready for different situations. Keep an eye on how negotiations are going and have a backup plan in case things don’t go as expected. Remember COVID supply issues! Work out a plan with other Dealerships to purchase parts at a lower discount during the strike.
Our experience with strikes
We’ve been around the block in the auto parts business, and have seen our share of strikes. These situations have taught us that being ready for anything is crucial. In the past, we’ve gotten through strikes by keeping in touch with our suppliers, finding other places to get parts if needed, and making sure our team knew what to do if things got tricky. Being prepared is the best way to handle unexpected challenges.
Other things to think about
Apart from stocking up on parts and strike planning, it’s smart to think about your whole supply chain. The car industry is changing a lot, with more electric cars and different customer preferences. Staying informed about these changes, using technology to make things run smoother, and having good relationships with your suppliers are all important for the long haul. Encourage your team to share ideas for improvements- they know better than anyone what’s working and what isn’t. Talking openly with your team members and getting their input can help you manage your inventory and plan for tough times. In a nutshell, when there’s a chance of a strike, parts managers need to be ready, but not go overboard with stocking up. Learning from experience, preparing for different situations, and thinking about the bigger picture can help parts managers succeed no matter what happens in the car industry.
What are your thoughts on the potential strike? Leave a comment below!
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