Many smaller US manufacturers that supply parts to the Detroit Three automakers will be at risk if a long United Auto Workers strike shuts down assembly lines starting next month, industry executives and analysts said.

Many small and medium-sized auto parts manufacturers are in a weak financial condition after the shock of pandemic shutdowns and subsequent semiconductor shortages that depressed vehicle production at General Motors (GM.N), Ford (F.N) and Stellantis NV’s (STLAM.MI) North American operations for much of the past three years, industry experts told Reuters.

A strike by the UAW is not a certainty. But the substantial wage and benefit gains that UAW President Shawn Fain has demanded, and the intensity of the campaign the union has mounted, have Detroit industry executives and analysts bracing for walkouts next month. The UAW staged a 42-day strike against GM in 2019 before reaching a new contract.

With regional banks tightening credit, some smaller parts makers could run out of cash or struggle to re-start production once the Detroit Three and the UAW come to terms and assembly lines roll, industry experts said.

The auto parts manufacturing industry employs 4.8 million people, according to the Motor Equipment Manufacturers Association trade group. Many of those jobs are in Michigan, Ohio and other Midwestern US states, as well as the Canadian province of Ontario.

Small suppliers are critical to automakers’ supply chains. If even one bracket or bolt or plastic interior part doesn’t arrive at an assembly line, production could stop. Automakers have spent much of the past three years dealing with supply chain disruptions, and are still working to recover.

“There’s no question, there will be a strong ripple effect down through the supply chain,” said Daniel Rustmann, a shareholder in Detroit’s Butzel law firm who works with auto suppliers. “It could be the straw that breaks the camel’s back.”

Some suppliers are already securing for a storm.

“Our revenue is going to take a hit of 10 to 20 per cent,” said Todd Olson, chief executive of Twin City Die Castings Co in Minneapolis, which manufactures an array of metal components for automakers.

Olson said he is working to keep inventory in check. A short strike would not force much change in Twin City’s operations. A longer strike would mean laying off some workers. But that comes with risks because of the low unemployment rate, he said.

“If it’s three months or something they’re gonna have other jobs right? They’re not coming back,” he said.

Laurie Harbour, president of Harbour Results, said she is concerned by the number of her firm’s auto parts-making clients who are not yet preparing for UAW walkouts.

About 30 per cent of a population of 400 companies whose 2022 financial data Harbour Results studied “is what we call unbankable. Their debt levels are too high and they are not turning a profit,” Harbour said. The share of troubled companies in the latest survey is up from 20 per cent based on 2021 data.

Many companies could be in worse shape now because production volumes remain below pre-pandemic levels, while borrowing costs and other expenses are higher, she said.

UAW’s Fain has said Sept. 14, the end of the current UAW master contracts with the Detroit Three, is a “deadline, not a reference point.” UAW members are voting this week to authorize strikes if new agreements are not concluded, and UAW leaders organized what they called “practice pickets” at certain plants this week.

The union is seeking an end to a wage system that pays new hires less than veterans doing the same work, a 40 per cent increase in hourly wages, restoration of cost-of-living adjustments and reinstatement of defined benefit pension plans for all UAW employees.

Automakers and the UAW agreed during the 2007 financial crisis to end pensions for newly-hired workers, replacing them with individually-managed 401(k) accounts. Restoring pensions could add significant new liabilities to automakers’ books.

Smaller Detroit Three suppliers will not have smooth sailing once the UAW contract talks are concluded, said Peter West of Actify, a firm that advises suppliers on automotive program management, and Mark Barrott of the Detroit consulting and accounting firm Plante Moran.

Suppliers face demands to invest in engineering and production equipment for a tsunami of new vehicle programs over the next few years as automakers develop new electric vehicles and try to sustain profitable combustion models, West said in an interview.

Over the longer term, however, automakers will be trying to cut the number of parts they order and simplify product lines, Barrott said.

“It’s not going to go smoothly,” he said.