You’re describing a dirty, broken system currently being cleaned up and repaired.
It is to an extent.
The thing that saved the tier suppliers was that most of them were bought up at bankruptcy sales by foreign business interests. They saved those domestic jobs from disappearing altogether.
I worked for more than one of them after the big auto industry collapse.
GM was looted by its shareholders, and chrysler was looted by daimler benz.
I went through all of that, and it caused me to move 2500 miles out of my way to find a new job.