As UAW President Shawn Fain dominates headlines with his daily Facebook live broadcasts and global media coverage, a more significant and increasingly precarious aspect of the auto industry demands our attention: the Tier 2 supply base.

Coined as the “supply chain” for a reason, the auto industry’s supply chain works on a tiered system and is only as strong as its weakest link. While the Original Equipment Manufacturers (OEMs) like Ford, GM, and Stellantis actually build the cars, and large Tier 1 suppliers such as Bosch, Lear, and Adient directly serve them, the Tier 2 supply base is responsible for supporting these Tier 1 companies.

Often smaller and frequently family-owned, these Tier 2 firms are financially fragile, leaving them vulnerable to disruptions like strikes and economic downturns.

As a former C-suite leader in Tier 1 supply chain management with over 36 years of experience, I urge stakeholders and the media to focus not only on the Big 3 and UAW but also recognize the significant risks the Tier 2 supply base poses.

Now is the time for our industry to strengthen and stabilize this foundational layer of the auto supply chain. Let’s divert our gaze from the towering figures of the Big 3 and the UAW to cast light upon the overlooked but essential Tier 2 suppliers struggling to survive. Their stability is vital for the well-being of the entire auto industry.

“Tier 2 suppliers are living on the jagged edge of liquidity, and now is not the time for a strike. It will be devastating to this segment of the automotive industry.” - Jan Griffiths, Creator and Host of the Automotive Leaders Podcast

Why the Tier 2 Supply Base is at Risk

- Hourly wages have surged by 23% since March 2019.

- Costs of raw materials, transportation, and utilities have also significantly increased.

- Interest rates have jumped from 5.2% to 8.5%.

For more information on understanding this risk and defining the actions you need to take, check out episode # 104 of the Automotive Leaders podcast