The Auto Industry's Unforeseen Stakeholder: The Construction Sector

The Auto Industry's Unforeseen Stakeholder: The Construction Sector

By Alex A. Calderone, President, Calderone Advisory Group, LLC

In the bustling heart of Detroit, where engines roar and assembly lines move with rhythmic precision, a new stakeholder emerges in the automotive narrative: the construction industry. As the United Auto Workers (UAW) union contemplates a historic strike against the Detroit Big Three, the ramifications extend beyond the confines of manufacturing plants and union halls.

The U.S. government, in its post-pandemic vision, has earmarked significant capital for the buildout of America 2.0. This ambitious blueprint envisions a nation driven by electric vehicles (EVs), with the automotive industry at its helm. The Detroit Three, along with their suppliers, are expected to spearhead this transformation, erecting state-of-the-art EV manufacturing facilities and gigafactories. The construction sector, having geared up for this massive infrastructural overhaul, finds itself deeply intertwined with the automotive industry's fate.

Yet, as the UAW pushes for its demands, a lurking concern emerges. If the automakers, in acquiescing to the union's terms, find their coffers depleted, the ripple effects could be profound. The envisioned EV infrastructure, requiring billions in investment, might face insurmountable delays or, worse, stagnation. Construction firms, having expanded their capacities in anticipation, could confront an unsettling reality: a landscape dotted with half-built factories and unfulfilled contracts. 

The construction and auto industries are more interlinked than ever, with both poised to shape America's green future. Yet, if automakers are financially strained by excessive union demands, the very foundation of this shared vision could be jeopardized.  We should not forget that GM and Stellantis (Chrysler) are only slightly more than a decade removed from bankruptcy, or that Ford narrowly avoided bankruptcy by mortgaging everything it had, including its Blue Oval logo.

The stakes are monumental. While the UAW's pursuit of better wages and conditions is commendable, the broader implications of their demands cannot be ignored.  As the auto industry grapples with this challenge, one can only hope for a resolution that safeguards the interests of all stakeholders, where the bigger picture is carefully measured by all parties.  In this industry, working together makes all the difference.

About the Author

Alex A. Calderone is the President of Calderone Advisory Group, a consultancy specializing in middle-market business challenges and opportunities. With a distinguished career that includes tenures at KPMG and Conway MacKenzie (now Riveron), Alex brings a wealth of expertise in advising both distressed and healthy companies in both the construction and automotive sectors.