{"id":67258,"date":"2023-09-30T12:22:43","date_gmt":"2023-09-30T16:22:43","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/uaw-expands-strike-to-ford-gm-suv-assembly-plants-stocks-are-down\/"},"modified":"2023-09-30T12:22:46","modified_gmt":"2023-09-30T16:22:46","slug":"uaw-expands-strike-to-ford-gm-suv-assembly-plants-stocks-are-down","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=67258","title":{"rendered":"UAW Expands Strike to Ford, GM SUV Assembly Plants. Stocks Are Down."},"content":{"rendered":"

The United Auto Workers union is expanding its strike against
\n General Motors<\/span>
\n and
\n Ford Motor,<\/span>
\n targeting one assembly plant at each company. Electric vehicles are central to the escalation. <\/p>\n

The targeted strike began on Sept. 15. Instead of a complete walkout, union workers are slowly expanding their effort to extract a better contract from the companies. Unlike the last expansion, when UAW members walked out of parts and distribution facilities across the country owned by GM (ticker: GM) and Chrysler parent
\n Stellantis<\/span>
\n (STLA), Ford (F) was included in this week\u2019s expansion. Stellantis was left out. <\/p>\n

\n

The escalation is a sign the union isn\u2019t happy with negotiations, caps what has been a wild week in Detroit.<\/p>\n

On Tuesday, Ford paused construction on a battery plant in Michigan. Ford didn\u2019t give specifics on the reason for the pause at the time, but the cost structure of the plant, which would likely be unionized by the UAW, was cited as a reason by CEO Jim Farley on Friday afternoon. He also called extending the strike \u201cgrossly irresponsible.\u201d <\/p>\n

The UAW, for its part, said it was focused on job security through the EV transition. \u201cI don\u2019t know why Jim Farley is lying about the state of negotiations. It could be because he failed to show up for bargaining this week,\u201d said Fain in an emailed statement. \u201cIf he were there, he\u2019d know we gave Ford a comprehensive proposal on Monday and still haven\u2019t heard back.\u201d<\/p>\n

The UAW likely wants new battery workers to be paid like assembly-line employees, Deutsche Bank analyst Emmanuel Rosner told Barron\u2019s<\/em>. That would mean hundreds of millions of dollars in additional labor costs, he estimated, saying Ford, and other auto makers, would prefer if new battery workers were paid on a different wage scale. <\/p>\n

GM CEO Mary Barra said the UAW is pitting the companies against one another, and the strategy only helps nonunion competition.<\/p>\n

\u201cIt is clear Shawn Fain wants to make history for himself, but it can\u2019t be to the detriment of our represented team members and the industry,\u201d Barra said.<\/p>\n

Earlier this week, President Joe Biden took to the picket lines and former President Donald Trump spoke at a rally near Detroit. Both kept to their expected talking points\u2014Biden came out to support the union, and Trump warned Biden\u2019s EV policies would hurt the auto industry. <\/p>\n

And on Thursday, Fain said in a recorded message<\/a> posted on X, formerly Twitter, that there were reports of violence against picketers and condemned \u201cthis violence that GM and Stellantis is enabling.\u201d <\/p>\n

Stellantis said it was appalled by the UAW\u2019s characterization of incidents on picket lines. \u201cThe companies are not the enemy and we are not at war,\u201d it said. \u201cWe respect our employees\u2019 right to advocate for their position, including their right to peacefully picket.\u201d <\/p>\n

GM said safety is its top priority and it cares deeply about the well-being of its team members and the community. \u201cShawn Fain\u2019s false accusations regarding recent picketing safety incidents is just another example of prioritizing inflammatory rhetoric over serious efforts to reach an agreement for the benefit of our team members,\u201d the company said.<\/p>\n

Fain\u2019s Friday update was \u201call about Ford,\u201d according to Benchmark analyst Mike Ward. He said he had been hopeful the union and Ford could soon reach a settlement, but that the union\u2019s latest action likely will delay that. The union chose to walk out of the Ford Chicago Assembly Plant that makes Explorer SUVs. <\/p>\n

That is a potentially big blow to Ford. In 2023, Ford has sold 121,659 Explorers in the U.S. through August, about 9% of Ford\u2019s total sales in America. Explorer is Ford\u2019s second-best-selling model behind F-150 trucks. <\/p>\n

Ford stock fell 1.1% Friday. The
\n S&P 500<\/span>
\n and
\n Dow Jones Industrial Average<\/span>
\n were down 0.3% and 0.5%, respectively. <\/p>\n

GM stock was down 0.6%. The UAW is walking out of GM\u2019s Lansing Assembly facility where the company produces Chevy Traverse and Buick Enclave vehicles.<\/p>\n

Stellantis shares were down 0.6% Friday. <\/p>\n

With Friday\u2019s expansion, about 25,000 UAW workers will be on strike against the Detroit Big Three auto makers. That is about 17% of total UAW members. <\/p>\n

Ford and GM shares are down about 17% and 14%, respectively, since the start of July when labor issues came to the fore. The
\n S&P 500<\/span>
\n is down about 4% over the same span. <\/p>\n

Stellantis stock is up 9%, partly because the company is more global, with headquarters in Europe. It is also a cheaper stock, trading for less than 4 times estimated 2024 earnings. GM and Ford shares trade for less than 5 times and 7 times, respectively. <\/p>\n

The shares are likely stuck until parties reach a resolution. <\/p>\n

\u201cI\u2019m not super optimistic around the outcome of these negotiations,\u201d added Rosner. \u201cThe UAW is set on getting what they have asked for, they\u2019re positioning themselves for a long strike.\u201d <\/p>\n

One way the UAW has done that is by limiting the number of workers on strike, which in turn limits the burden on the UAW strike fund. <\/p>\n

The union has come down in its ask for wage increases over the life of the contract. Initially, the group asked for a 40% increase; now, members are pushing for an increase in the range of 30%. The auto makers are offering closer to 20%. Both sides are cagey about deal specifics. <\/p>\n

\u201c[Ford, GM, and Stellantis are] doing incredibly well,\u201d Fain said. \u201cAnd guess what? We should be doing incredibly well.\u201d <\/p>\n

The union also wants to end wage tiers, a concession won by the auto makers during the 2008-2009 financial crisis. Tiers provide a lower wage for newly hired workers in certain jobs. <\/p>\n

Write to Al Root at allen.root@dowjones.com<\/p>\n<\/p><\/div>\n