Effects transfer down the supply chain

Workers in component manufacturing and ancillary companies confront even more intense restructuring pressures than those that generally exist in assembly operations. Automakers' use of just-in-time systems to cut costs and push efficiency gains means management keeps inventories tight and buffers lean to minimize working capital and increase returns. As final vehicle demand has slumped steeply, orders for auto parts have dropped in tandem. "Demand-pull" production systems more rapidly transmit effects of curtailed final demand across the whole value chain.

For workers at suppliers large and small, employers have pushed to slash jobs, cut hours and consolidate plants. The further down the value chain, the less secure the terms of employment and the more strenuous the conditions of work, meaning the impacts of the crisis become harsher. At small and medium enterprises (SMEs) populating subordinate tiers of production chains, workers are least likely to benefit from social protections or collective agreements due to lower levels of union representation.

Strategies of assemblers and major first-tier component companies have propelled supply chain consolidation in an incessant cost reduction drive to boost margins. Continued cuts in numbers of direct suppliers and a squeeze created by passing down costs while making contracts conditional on ongoing price reductions have fuelled a painful shakeout. The crisis-induced dive in parts orders combined with restricted credit availability has pushed many companies to the brink. Assemblers have been forced to extend to their suppliers financial assistance for working capital and in some cases to restore prior price concessions to keep them afloat. In the face of this, metalworkers and their unions have fought back to defend what is rightfully due to workers at companies such as Visteon, Delphi, Continental, Bosch and Valeo, among many others.