Indian auto component exports at risk amid UAW Strike in the US

  • Industry News
  • Sep 20,23
Approximately one-third of India's automotive component exports are destined for North America, and this strike by thousands of UAW members, known as a 'stand-up strike,' is impacting the US auto majors.
Indian auto component exports at risk amid UAW Strike in the US

The strike called by the United Auto Workers (UAW), the American automotive workers' union, against the Big Three automakers (Ford, General Motors, and Stellantis) in Detroit, USA, is causing concerns for automotive component manufacturing hubs in India.

Approximately one-third of India's automotive component exports are destined for North America, and this strike by thousands of UAW members, known as a 'stand-up strike,' is impacting the US auto majors. They have initiated walkouts at one factory for each of these automakers in the United States and plan to expand their protests to multiple locations.

Negotiations are currently underway between the union and the automakers to address the workers' demands for a wage increase.

This strike marks the first time that the UAW has simultaneously targeted all three major automakers, resulting in factory shutdowns in states such as Michigan, Ohio, and Missouri.

In the fiscal year 2023, exports to North America accounted for 30% of the Indian auto ancillary sector's export revenue, totalling $6.5 billion, making it the largest market for India.

Tier-1 suppliers serving North America, including companies like Sona Comstar, Sundaram Fasteners, Bharat Forge, and Motherson Group, could face adverse effects if the strike continues.

In 2019, the UAW's protests against General Motors saw 49,000 workers from 50 factories across the US going on strike, which lasted for over 40 days. This time, industry experts anticipate a faster resolution, as political intervention is likely in an election year to facilitate negotiations.

On the third day of the strike, which began on September 15, 2023, Sona Comstar, a leading supplier of critical electric vehicle components and automotive systems to original equipment manufacturers worldwide, informed Indian stock exchanges that it is closely monitoring the situation. They mentioned that while the strike's current impact on their sales is minimal, a more significant impact could occur if the strike persists or spreads to other plants.

Approximately 45% of Sona Comstar's revenues come from the US, with 20% of its export volumes originating from the Big Three in North America, excluding Mexico.

Other companies with exposure to the Big Three OEMs among the listed large auto ancillaries, such as Sona BLW and Sundaram Fasteners, are also closely monitoring the situation. Sundaram Fasteners' exposure to the three US companies is around 10%, while for Samvardhana Motherson International, it is 3-4%, according to informed sources.

Vinnie Mehta, Director General of the Automotive Components' Manufacturers' Association, highlighted the significance of the North American market for Indian auto components exports and expressed hope that the issues would be resolved in the mutual interest of both workers and the industry.

Source: Mint

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