Auto-Parts Suppliers at Risk of UAW Strike Impact

Auto-parts suppliers Lear Corp. and Magna International Inc. have been identified as the companies with the "greatest counterparty exposure" to a possible strike by the United Auto Workers (UAW), according to Garrett Nelson at CFRA. In a note released on Wednesday, Nelson highlighted the potential risks faced by the supply chain and the financial health of parts and equipment suppliers in the event of a prolonged strike.

On the other hand, Aptiv Plc and Autoliv Inc. are among the companies with the least exposure to the UAW strike, he noted. However, for other suppliers, their level of exposure to the Detroit Three automakers is not as clear due to a lack of disclosure, although it is still considered significant.

The UAW contract is set to expire at midnight on Thursday, and a significant gap remains between the autoworkers' demands and the offers presented by Ford Motor Co., General Motors Co., and Stellantis NV. Reports suggest that the UAW may deviate from their traditional approach and adopt targeted strikes at specific assembly lines of all three automakers.

The potential impact of such a strike on the supply chain and auto-parts suppliers cannot be understated. Lear Corp. and Magna International Inc. face higher levels of risk, while Aptiv Plc and Autoliv Inc. are better positioned to weather the storm. The fate of other suppliers remains uncertain, but their exposure to this labor dispute should not be overlooked.