President Joe Biden's administration is discussing emergency aid to protect smaller firms that supply U.S. auto manufacturers if the United Auto Workers union goes on strike, a source with knowledge of the matter said on Thursday.
The Detroit Three automakers and union negotiators offered little hope a deal would be reached on Thursday to avoid a midnight walk-off that would be the UAW's first-ever simultaneous strike against the U.S. carmakers.
The UAW has outlined plans for a series of strikes targeting individual, undisclosed U.S. auto plants, rather than a full walkout, if agreements are not reached by the contract expiration.
Aid for suppliers has been discussed "since the minute it became clear there could be a strike" but those talks are "premature and fluid," the source said.
Auto suppliers held recent discussions with the White House about the potential impact of a strike and possible options that the Biden administration could tap to help suppliers weather a prolonged strike.
The worry is that "tier-1 suppliers will still be able to weather the storm financially," but it's the ones down the line that can't withstand the "impact beyond six to eight weeks," the source said.
The Washington Post was first to report such aid was being considered, and said options could include grants from the Labor Department to workers or loans from the Small Business Administration (SBA) to companies.
The White House had no comment. The Labor Department and the SBA did not immediately respond to requests for comment.
Many smaller U.S. manufacturers that supply parts to the Detroit Three automakers are in a weak financial condition after the shock of pandemic shutdowns and subsequent semiconductor shortages that depressed vehicle production at the three companies for much of the past three years.
The auto parts manufacturing industry employs 4.8 million people, according to the Motor Equipment Manufacturers Association trade group. Many of those jobs are in Michigan, Ohio and other Midwestern states, as well as the Canadian province of Ontario.
Small suppliers are critical to automakers' supply chains. If even one bracket or bolt or plastic interior part doesn't arrive at an assembly line, production could stop. Automakers have spent much of the past three years dealing with supply chain disruptions, and are still working to recover.
(Reporting by Nandita Bose, David Shepardson and Paul Grant; writing by David Ljunggren; Editing by Heather Timmons and Leslie Adler)
