Detroit Axle Closes Ferndale Warehouse, 102 Employees Laid Off

Detroit Axle Announces Closure of Ferndale Warehouse

Detroit Axle, a family-owned business based in Michigan, has announced the closure of its warehouse located in Ferndale. The decision comes as a result of ongoing disruptions in the automotive parts supply chain caused by recent changes in U.S. import tariff policies. This move will lead to the permanent loss of 102 jobs, including positions in shipping, box making, and driving.

The details of the layoffs were outlined in a WARN Act notice submitted to the Michigan Department of Labor and Economic Opportunity. According to the notice, the employee separations will take place on August 25. Notably, none of the affected roles are union positions.

The Worker Adjustment and Retraining Notification Act (WARN Act) mandates that companies undergoing mass layoffs or site closures must provide advance notice to the state's labor department if certain conditions are met regarding company size or the number of employees impacted. Detroit Axle, which operates as a retailer and distributor of auto parts, has been complying with these requirements.

For over three decades, the company has grown from a local supplier in the Rust Belt to a national online dealer with significant annual sales. However, recent changes in trade policy have threatened this growth. In June, Detroit Axle filed a complaint with the U.S. Court of International Trade, arguing that new tariff policies have directly affected its operations.

In the complaint, the company stated: "Through thirty-five years of hard work and ingenuity, and with the help of longstanding U.S. laws and policies promoting free trade, the company has transformed from a local Rust Belt supplier to a national Internet-based dealer with hundreds of millions of dollars in annual sales." It continued, "But as a result of recent drastic and unlawful changes in trade policy, this American success story — and the jobs of its hundreds of U.S. employees in Michigan — could be wiped out in a matter of months."

Detroit Axle had relied on contracts with manufacturers in China for certain parts that were not available domestically. However, the company now faces an existential threat due to recent changes in import tariffs, including new rules affecting goods valued at less than $800.

Many of its competitors have not been as heavily impacted because they source small-dollar parts from other countries or deal with lower tariff rates. The company claims that customers will not bear the increased prices, and it cannot absorb them either.

The impact on operations in Mexico has been severe, with activities reaching a near standstill. Shifting operations back to Michigan is not feasible due to logistical challenges such as capital investments and long-term contracts. As inventory in Michigan dwindles, the company said it will be forced to close its Michigan facilities and lay off hundreds of employees.

Even if the company could find new suppliers outside of China and restart operations, it likely would never achieve its former level of success. A short period of dormancy could cost Detroit Axle its top-seller status on critical e-marketplaces like Amazon and eBay.

The company first noticed changes in 2018 when tariffs were in effect. To mitigate the impact of tariffs aimed at Chinese imports, it decided to route some of its orders through a distribution facility in Mexico. This strategy helped the company minimize the effects of the tariffs and allowed it to expand its Michigan workforce and business operations.

Detroit Axle’s experience highlights the challenges faced by businesses reliant on international supply chains. The company’s efforts to adapt have been met with increasing obstacles, ultimately leading to the decision to close its Ferndale warehouse and lay off a significant portion of its workforce.