The UAW strike widens: Are you prepared to deal with the liquidity impact?

THE ALIXPARTNERS AUTOMOTIVE BRIEF

As you no doubt know by now, the United Auto Workers' unprecedented multi-company strike against the Detroit auto makers has now been expanded to include 38 parts-distribution facilities across 20 states.

As this very-unpredictable strike continues, the potential effect on liquidity continues to grow, especially for suppliers.

Without this latest escalation and without an end to the strike in sight, companies need to be prepared with a strategy to combat these uncertain times. AlixPartners has the experience, expertise, and tools to assist you with this process. These tools include a dynamic liquidity model that allows a company to:

• Instantly understand the liquidity impact depending on the length of the strike and how much of the Detroit Three’s production base is affected.
• Analyze the role potential cost-reduction initiatives would have in helping mitigate cash burn, including these potential actions:
  • Furloughing hourly and/or salaried workers
  • Suspending capital projects
  • Aligning purchasing and receiving with sales projections
  • Ensuring working capital is properly managed
  • Suspending discretionary projects and spending

For one supplier we’ve worked with recently, our scenario-planning assumed that an 8-week strike would lead to a 58% decline in sales over the affected period – and, if actions weren’t taken, a massive drain on liquidity. However, a proactive strategy has been designed to help contain the impact on liquidity and prepare the company for a quicker recovery once the strike is resolved – whatever its duration may be.

The AlixPartners liquidity model is dynamic, it’s objective, it’s designed to provide immediate feedback, it can be developed and implemented quickly (with a small team), and perhaps most important, it can provide peace of mind.

Contact the authors to arrange a call to discuss the merits of this unique AlixPartners approach.