We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UAW Ratchets Up Detroit 3 Tensions With Kentucky Plant Standoff
Read MoreHide Full Article
The historic strike by the United Auto Workers (UAW) union against the Detroit 3 automakers —General Motors (GM - Free Report) , Ford (F - Free Report) and Stellantis (STLA - Free Report) — entered its 29th day. In a surprise move this Wednesday, UAW initiated a strike at Ford’s largest factory, the Kentucky Truck Plant. This resulted in the walkout of an additional 8,700 workers, which now brings the total number of striking autoworkers to around 34,000, or 23% of the UAW's roughly 146,000 members. Ford labeled the decision as "grossly irresponsible," attributing it to the union leadership's aim to inflict "reputational damage" on the Detroit 3 and cause "industrial chaos."
The Background
The strike, which began on Sep 15, had initially affected three plants—GM's Wentzville Assembly plant in Missouri, Ford's Michigan Assembly plant in Wayne and Stellantis' Toledo Assembly Complex in Ohio. A week later, on Sep 22, with no new labor contract in place, the UAW extended strikes to 38 parts and distribution centers across 20 states, primarily focusing on General Motors and Stellantis. On Sep 29, UAW president Shawn Fain further expanded the historic strike to include a GM facility in Lansing, MI (which manufactures the Chevrolet Traverse and Buick Enclave) and a Ford assembly plant in Chicago (where Explorer and Lincoln Aviator models are built).
In the past few weeks, on Fridays, Fain has either advocated for additional walkouts or announced progress in talks. On Oct 6, the UAW decided against further strikes at Detroit Three auto plants, marking the first week without strike expansion since the work stoppages began on Sep 15. This pause in strikes came as General Motors agreed to include battery cell workers in the company's national agreement.
The UAW is negotiating new labor contracts with Ford, General Motors and Stellantis. The UAW’s list of demands is extensive, including a 36% pay increase over four years, annual cost-of-living adjustments, pension benefits for all employees, enhanced job security measures, constraints on the use of temporary workers and a transition to a four-day workweek, among others. They also call for the elimination of the two-tiered wage system, which was adopted after the 2008 financial crisis.
The automakers have acknowledged workers' concerns and expressed their willingness to negotiate further to resolve the issues at hand. However, they also argue that the UAW’s demands could potentially hamper their competitiveness in the global market.
GM, Ford and Stellantis have all agreed to a 20-23% increase in base wages over a four-year deal. They are also negotiating with the UAW on issues like retiree benefits, potential options for future battery plant workers and cost-of-living adjustments amid high inflation. Per Fain’s Facebook Live session, Ford and Stellantis have agreed to reinstate COLA, and GM isn’t far behind.
UAW's Strike Wave Hits Ford’s Kentucky Plant
The UAW union escalated tensions with Ford by calling a strike at the Kentucky Truck Plant after talks between the two parties collapsed. Ford's offer included a 23% wage increase over four years, wage adjustments in line with inflation and a reduced timeframe for new hires to attain top wages. The UAW entered the latest negotiation session, anticipating Ford to enhance its proposition. However, the differences between the two parties became evident quickly, leading Fain to instruct Kentucky plant workers to strike.
This is a major escalation in the ongoing strike as the Kentucky Truck Plant, located in Louisville, is pivotal for Ford, producing $25 billion in annual revenues. It manufactures the Super Duty versions of Ford’s F-Series trucks, the Ford Expedition and the Lincoln Navigator SUVs. The plant accounts for about 16% of Ford's total revenues, with a new vehicle being produced every 37 seconds. Given its scale, any extended halt in its operations could cause a ripple across up to 13 other Ford plants, leading to potential disruptions in the production of engines, transmissions, and axles.
UAW's decision to intensify the strike arose from Ford's perceived lack of flexibility in negotiations. Fain highlighted that the company merely reiterated its previous offer, neglecting to provide enhanced economic benefits. Ford, in response, emphasized its constraints, stating that any further increase in its current offer would jeopardize its capacity to invest in electric vehicles. Kumar Galhotra, president of Ford's combustion engine vehicles division, emphasized that they had reached their negotiation limit. Quoting Top of FormGalhotra,“We are very clear. We are at the limit. Any more will stretch our ability to invest in the business.”
Automakers on Edge as Financial Strains Increase
The UAW's unexpected strike at Ford's pivotal factory has not only increased tensions for Ford but has amplified the pressure on Stellantis and General Motors as well. Recent indications from the UAW suggest that further strikes could be on the horizon, particularly targeting GM's assembly plant in Arlington, TX, which produces high-end SUVs like the Cadillac Escalade and Chevy Suburban. Such a move would significantly impact GM, given the profitability of these vehicles. Additionally, Stellantis might find itself in the crosshairs with its Ram pickup truck factories in Sterling Heights and Warren, MI, and two Jeep SUV factories in Detroit, which are high-profit centers.
Sam Fiorani—vice president of global vehicle forecasting at AutoForecast Solutions—has already raised alarms, suggesting that if GM and Stellantis do not present fresh offers soon, they are treading on thin ice.
The financial implications of these strikes are staggering. Wells Fargo estimates Ford to incur weekly losses of around $150 million in core profit due to the ongoing strike at the Kentucky plant.
Furthermore, the Anderson Economic Group's analysis reveals that the industry has been hit by a whopping $5.5 billion loss in just the initial three weeks of the strike, breaking down into lost wages and substantial losses for the Detroit 3 manufacturers, suppliers, and even dealers and customers.This financial toll encompasses $579 million in worker wages, $2.68 billion in losses incurred by the automakers, $1.60 billion for parts suppliers, and $1.26 billion in dealer and customer losses. Such a financial strain in an already competitive market puts a significant burden on the auto industry.
While the automakers might have dodged a bullet last week with no strike expansion, the surprise strike at Ford’s Kentucky plant on Wednesday signals a potentially tumultuous narrative for the upcoming week. Fain's scheduled video address tonight might be the platform to announce the UAW's next strike targets in this high-stakes industrial showdown.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
UAW Ratchets Up Detroit 3 Tensions With Kentucky Plant Standoff
The historic strike by the United Auto Workers (UAW) union against the Detroit 3 automakers —General Motors (GM - Free Report) , Ford (F - Free Report) and Stellantis (STLA - Free Report) — entered its 29th day. In a surprise move this Wednesday, UAW initiated a strike at Ford’s largest factory, the Kentucky Truck Plant. This resulted in the walkout of an additional 8,700 workers, which now brings the total number of striking autoworkers to around 34,000, or 23% of the UAW's roughly 146,000 members. Ford labeled the decision as "grossly irresponsible," attributing it to the union leadership's aim to inflict "reputational damage" on the Detroit 3 and cause "industrial chaos."
The Background
The strike, which began on Sep 15, had initially affected three plants—GM's Wentzville Assembly plant in Missouri, Ford's Michigan Assembly plant in Wayne and Stellantis' Toledo Assembly Complex in Ohio. A week later, on Sep 22, with no new labor contract in place, the UAW extended strikes to 38 parts and distribution centers across 20 states, primarily focusing on General Motors and Stellantis. On Sep 29, UAW president Shawn Fain further expanded the historic strike to include a GM facility in Lansing, MI (which manufactures the Chevrolet Traverse and Buick Enclave) and a Ford assembly plant in Chicago (where Explorer and Lincoln Aviator models are built).
In the past few weeks, on Fridays, Fain has either advocated for additional walkouts or announced progress in talks. On Oct 6, the UAW decided against further strikes at Detroit Three auto plants, marking the first week without strike expansion since the work stoppages began on Sep 15. This pause in strikes came as General Motors agreed to include battery cell workers in the company's national agreement.
The UAW is negotiating new labor contracts with Ford, General Motors and Stellantis. The UAW’s list of demands is extensive, including a 36% pay increase over four years, annual cost-of-living adjustments, pension benefits for all employees, enhanced job security measures, constraints on the use of temporary workers and a transition to a four-day workweek, among others. They also call for the elimination of the two-tiered wage system, which was adopted after the 2008 financial crisis.
The automakers have acknowledged workers' concerns and expressed their willingness to negotiate further to resolve the issues at hand. However, they also argue that the UAW’s demands could potentially hamper their competitiveness in the global market.
GM, Ford and Stellantis have all agreed to a 20-23% increase in base wages over a four-year deal. They are also negotiating with the UAW on issues like retiree benefits, potential options for future battery plant workers and cost-of-living adjustments amid high inflation. Per Fain’s Facebook Live session, Ford and Stellantis have agreed to reinstate COLA, and GM isn’t far behind.
UAW's Strike Wave Hits Ford’s Kentucky Plant
The UAW union escalated tensions with Ford by calling a strike at the Kentucky Truck Plant after talks between the two parties collapsed. Ford's offer included a 23% wage increase over four years, wage adjustments in line with inflation and a reduced timeframe for new hires to attain top wages. The UAW entered the latest negotiation session, anticipating Ford to enhance its proposition. However, the differences between the two parties became evident quickly, leading Fain to instruct Kentucky plant workers to strike.
This is a major escalation in the ongoing strike as the Kentucky Truck Plant, located in Louisville, is pivotal for Ford, producing $25 billion in annual revenues. It manufactures the Super Duty versions of Ford’s F-Series trucks, the Ford Expedition and the Lincoln Navigator SUVs. The plant accounts for about 16% of Ford's total revenues, with a new vehicle being produced every 37 seconds. Given its scale, any extended halt in its operations could cause a ripple across up to 13 other Ford plants, leading to potential disruptions in the production of engines, transmissions, and axles.
Ford currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
UAW's decision to intensify the strike arose from Ford's perceived lack of flexibility in negotiations. Fain highlighted that the company merely reiterated its previous offer, neglecting to provide enhanced economic benefits. Ford, in response, emphasized its constraints, stating that any further increase in its current offer would jeopardize its capacity to invest in electric vehicles. Kumar Galhotra, president of Ford's combustion engine vehicles division, emphasized that they had reached their negotiation limit. Quoting Top of FormGalhotra,“We are very clear. We are at the limit. Any more will stretch our ability to invest in the business.”
Automakers on Edge as Financial Strains Increase
The UAW's unexpected strike at Ford's pivotal factory has not only increased tensions for Ford but has amplified the pressure on Stellantis and General Motors as well. Recent indications from the UAW suggest that further strikes could be on the horizon, particularly targeting GM's assembly plant in Arlington, TX, which produces high-end SUVs like the Cadillac Escalade and Chevy Suburban. Such a move would significantly impact GM, given the profitability of these vehicles. Additionally, Stellantis might find itself in the crosshairs with its Ram pickup truck factories in Sterling Heights and Warren, MI, and two Jeep SUV factories in Detroit, which are high-profit centers.
Sam Fiorani—vice president of global vehicle forecasting at AutoForecast Solutions—has already raised alarms, suggesting that if GM and Stellantis do not present fresh offers soon, they are treading on thin ice.
The financial implications of these strikes are staggering. Wells Fargo estimates Ford to incur weekly losses of around $150 million in core profit due to the ongoing strike at the Kentucky plant.
Furthermore, the Anderson Economic Group's analysis reveals that the industry has been hit by a whopping $5.5 billion loss in just the initial three weeks of the strike, breaking down into lost wages and substantial losses for the Detroit 3 manufacturers, suppliers, and even dealers and customers.This financial toll encompasses $579 million in worker wages, $2.68 billion in losses incurred by the automakers, $1.60 billion for parts suppliers, and $1.26 billion in dealer and customer losses. Such a financial strain in an already competitive market puts a significant burden on the auto industry.
While the automakers might have dodged a bullet last week with no strike expansion, the surprise strike at Ford’s Kentucky plant on Wednesday signals a potentially tumultuous narrative for the upcoming week. Fain's scheduled video address tonight might be the platform to announce the UAW's next strike targets in this high-stakes industrial showdown.