Logistics and supply chain experts are sounding the horn warning that the ripple effects of the targeted United Auto Workers strike manufacturing strikes against the Detroit Three will hit the trucking industry hard and could leave the smaller tier 2 and 3 suppliers filing for bankruptcy.

“For every [General Motors] job, there’s six others in the economy that depend on us running, so we’ve got to get back to work,” Mary Barra, CEO of General Motors, told CNBC. 

Read more: American manufacturing is coming back. So are strikes. 

Some of those jobs in the automotive manufacturing ecosystem are in the trucking industry.

“The U.S. auto industry is a significant contributor to the nation’s freight economy,” stressed Chris Spear, president of the American Trucking Associations. “Trucks move more than $950 billion worth of cars, trucks and parts. That’s hundreds of millions of tons of freight that are subject to disruption if this dispute continues for a significant period of time.”

Data from FourKites shows that between Aug. 20 and Sept. 14 there was a substantial uptick in rescheduled over-the-road auto shipments originating in Mexico and bound for the United States.

Tom Gregorchik, vice president of industry strategy at FourKites, told FreightWaves that the rescheduling is a result of auto firms beginning to hedge their bets that the strike threat was very real and would cause them to cancel or push out inbound parts from Mexico.

“Approximately 8% of all OTR auto shipments from Mexico to the U.S. have been rescheduled,” Gregorchik explained. “This is compared to the average 5% rate of shipments.”

Gregorchik said the average length of transit for OTR auto shipments from Mexico to the U.S. is now nearly double.

“In 2022, travel time was around 35 days,” he said. “OEMs are willing to accept longer transit times to reduce transit costs but for parts that they are willing to take the inventory risk on, they still have the components on the way should the strike be resolved quickly.”

Gregorchik said that based on the current state of negotiations, he predicts volumes from Mexico will continue to fall, adding that there’s more certainty components from Mexico will be needed to get production going again. This will hit the bottom line of the trucking industry and impact suppliers.

According to the U.S. Chamber of Commerce, there are approximately 5,600 U.S. suppliers and more than 690,000 supplier jobs tied to the Detroit Three — GM (NYSE: GM), Ford (NYSE: F) and Stellantis (NYSE: STLA). These tier 1, 2 and 3 suppliers account for anywhere between 20% and 70% of their business. The smaller suppliers, which are already facing challenges with increased costs and lower profits, may need to seek bankruptcy protection if the strike lasts several weeks.

The American Automotive Policy Council estimates that within the Detroit Three, each automaker assembly plant job supports nearly seven other jobs with suppliers, or about 871,000 workers.

“A prolonged strike could be a nuclear event for tier 2 and lower-level tier supply chain providers,” said Joseph McCabe, CEO of AutoForecast Solutions. “The combination of high interest rates and lack of PPP money will decimate suppliers that usually don’t have three months of cash on hand.”

The trickle-down impact of the decrease in parts moving out of the plants will not only impact the trucking industry but also dealership supply chains across the country.

Tom Maoli, owner of dealership chain Celebrity Motor Cars, told FreightWaves that his company is still recovering from the chip shortage as well as the delay in parts related to the Canada port strike.

“We can withstand a strike for two weeks,” Maoli said. “While we have a 45-day supply of cars, the big problem is auto parts. Past the two-week mark, we will have auto parts shortages.”

The automotive group has six dealerships that sell Ford, Chrysler, Lexus, BMW, Maserati, Alfa Romeo, Mercedes-Benz and Lexus vehicles.

“Even some of the foreign cars are exposed to this strike because some UAW plants make parts for the foreign cars,” Maoli said.

“If this strike continues and the supply of auto parts is impacted, it can impact the consumer transportation system,” he added. “If people can’t get their cars repaired and they have no other modes of transportation, they can’t go to work. The impact of this strike is far reaching and will impact the consumer.”