Source: Jamie L. LaReau, Detroit Free Press
Anxious car dealers and impatient customers are caught in the aftermath of the 40-day UAW strike against General Motors that ended last week.
GM was restarting most of its plants Monday morning with an eye on getting parts to dealers fast.
It sent out a notice late Friday to its dealers that said: “One of our top priorities is to restore the health of our parts distribution network.”
The note said GM is making plans including adding shifts and hiring more people to gets parts to dealers. “Customer care and Aftersales will continue to prioritize critical customer orders,” the note said.
For many GM dealers that’s good news. At Motor City Buick GMC in Bakersfield, California, 55 vehicles sit on the lot awaiting parts for repairs, said John Pitre, COO of Motor City. GM is paying for some of those people to be in loaner cars, but Pitre is also paying on some, too, and it’s adding up.
“We’re going to see a six-figure impact for September and October in terms of lost revenue in parts and service due to the strike,” said Pitre. “It’s pretty impactful. We did what we could to scavenge parts from the aftermarket and other dealers, but it will have an impact.”
Pitre worries that customers who went to other service centers to get their vehicles repaired are lost for good.
Restarting the process
About 46,000 UAW workers went on a nationwide strike at 12:01 a.m. Sept. 16 and ended the stoppage when members ratified a four-year contract officially on Friday. The strike will hit GM hard too.
David Whiston, equity strategist at Morningstar Research Services, estimates GM took a $77 million-a-day hit to its North America profits. At that rate, the company would have been on pace to lose about $3 billion over the course of the strike.
GM has the vehicle parts its dealers need in its warehouses, but it could not ship them during the strike because warehouse workers are union members.
“Leveraging our wholesale dealers and shipping parts directly from suppliers to dealers helped keep the flow of most parts going, albeit at reduced levels,” said Jim Cain, GM spokesman. “Large collision repair parts like body panels, stampings, etc., were more impacted because the GM facilities that produce them were not working.”
GM started the process of restoring the system over the weekend, said Cain. He expects normal operations to be restored “early this week.”
Cain could not provide an estimate for the time required to clear back orders. He could only say that GM is aware of the impact the strike has had on its dealers and customers, and “we are working hard to recover as quickly as possible.”
For Pitre, GM can’t get him parts fast enough.
“Our parts inventory is 20% below its normal run rate that equates to about $200,000 to $300,000 worth of parts,” said Pitre.
He said that’s 20 truckloads of parts to fill the dealership’s nearly empty shelves. That creates a challenging logistical plan for Pitre.
“The process of getting them from the loading dock to the shelves is a chore,” said Pitre. “We’re looking at how we’re going to accommodate those trucks and get them unloaded.”
Pitre expects “the semi-tractor trailer train” to start arriving later this week and continue with deliveries for 10 days.
For Missouri dealer Lynn Thompson, service business for September and October will be flat compared with the year-ago period, he said.
“We only had three cars in our shop that we couldn’t get parts for,” said Thompson, co-owner of Thompson Sales in Springfield, Missouri. “We were more concerned we’d get in a jam if the strike went two months.”
Thompson paid for customers to be in loaner cars. He was able to buy a critical GM part off of eBay to get one of the three vehicles fixed. So now two cars sit awaiting parts.
About six other customers needed repairs during the strike, but their cars were safe to drive until the strike ended.
“They’re at the top of our list so the second we get the parts in we’ll go pick up their car or whatever they want to do, and we’ll fix it,” said Thompson.
The shortage of parts also forced GM to halt some production at its plants in Canada and Mexico. Most notably, GM had to temporarily stop building its highly profitable 2020 Chevrolet Silverado and GMC Sierra pickups in Mexico and the new 2020 Chevrolet Blazer SUV in Mexico due to a parts shortage.
Those plants can’t resume production until the U.S. plants that make those parts can get catch up and ship the parts needed for production.
GM resumed operations at “a few plants” over the weekend with voluntary shifts, including Flint Assembly and Fort Wayne Assembly in Indiana, said GM spokesman David Barnas.
“The balance of our plants were looking to restart operations with their first scheduled shift (Monday) morning,” said Barnas.
GM builds the 2020 GMC Sierra 1500 and Chevrolet Silverado 1500 at Fort Wayne. At Flint, it builds the heavy-duty 2020 Chevrolet Silverado and GMC Sierra Crew and regular cab pickups.
Both Pitre and Thompson said their new car sales slowed earlier this month.
Thompson blames it on an overall sluggish retail month, not so much on the strike. He said he’ll sell about 85 cars for October, flat with a year ago.
“It’s been a struggle, it’s been tough,” said Thompson.
He said GM offered incentives at a “normal level,” but “people just weren’t buying, it was very strange.”
Thompson stocked “heavy” inventory ahead of the strike and has a lot of 2020 models.
Pitre said his sales were affected too, but “not as badly as service and parts because we had a good inventory of trucks going into the strike. Our pipeline didn’t dry up until two weeks ago. But now, we’re looking until the end of November before we see fresh inventory again. I’m anticipating November could be a challenge.”
Customers were mostly understanding, said Pitre, unless they were body shop customers who wanted a vehicle fixed fast and the dealership didn’t have the part.
“We had some people who needed the service and we didn’t have the part and they went somewhere else to the aftermarket,” said Pitre.
“We don’t know if those people will be back.”