Indian auto parts makers brace for impact as workers’ strike persists in US

A prolonged strike by the United Auto Workers (UAW) in the US has put Indian auto component exporters in a precarious situation.

In fiscal 2023, North America’s share of India’s auto parts exports grew to 32%, marking an 8% increase, showed data from the Auto Component Manufacturers Association of India (ACMAI).

Despite recessionary trends in Europe and the US, exports of auto components grew by 5.2% to ₹1.61 trillion, or about $20.1 billion, in FY23 against ₹1.41 trillion in FY22, data showed.

ACMAI represents about 850 manufacturers who contribute more than 90% of the organized sector’s turnover in the auto component industry.

“North America is crucial for Indian auto component exports. We are keeping a close eye on developments in Detroit and are hopeful for a resolution that benefits both workers and the industry,” Vinnie Mehta, director-general at ACMAI, said.

Fearing a hit on profitability, auto parts maker Sona BLW Precision Forgings Ltd last week told the exchanges: “We are monitoring the situation closely. There is minimal impact on the sales of the company currently, but there may be higher potential impact if this strike persists for long or extends to the other plants.”

“UAW went on strike at some of the plants of three original equipment manufacturers (OEMs) on 15 September 2023. The company (Sona BLW) supplies to these three OEMs in the US, directly or indirectly,” it told the exchanges.

Workers had begun targeted strikes against Chrysler parent Stellantis, General Motors and Ford seeking pay hikes matching the jumps in CEO salaries, shorter work weeks and job security as the sector transitions toward electric vehicles.

Along with Sona BLW, Motherson Group, Bharat Forge, and Sundaram Fasteners are the leading auto parts makers that export to the US. The auto component makers export various parts ranging from drive transmission and steering to engine components, along with body/chassis, suspension, and braking systems.

Meanwhile, the 10-day workers’ strike against the big three automakers has turned into a political flashpoint, with both US President Joe Biden and his predecessor Donald Trump set to rally behind the unions in Michigan over Tuesday and Wednesday.

Biden is set to join striking UAW members on a picket line in Wayne County, Michigan, at 12pm EDT, or 9.30pm IST, on Tuesday in what is the most support shown for striking workers by a sitting president in at least 100 years, Reuters reported, citing labor historians.

Democrat Biden’s rival Donald Trump, the front-runner to be the Republican party’s 2024 presidential candidate, will address union workers at an auto supplier near Detroit on Wednesday.