Ford Executive Chairman Bill Ford urged an end to an escalating UAW strike Monday morning, while Wall Street sized up a bigger hit to Ford earnings. Ford stock rallied.
In a rare media briefing, the former CEO and great-grandson of company founder Henry Ford alluded to last week's UAW strike expansion to Ford's Kentucky plant, which makes extremely profitable trucks like the F-150 Super Duty.
If the UAW strike continues, "it will have a major impact on the American economy and devastate local communities," Ford said during the briefing.
He also warned that the strike is hurting Ford, General Motors and Stellantis while nonunionized rivals like Tesla and foreign automakers are "loving this strike" and will win.
The automaker on Monday told more than 550 Ford employees at six plants not to report to work. It cited knock-on effects from the strike at the Kentucky Truck Plant, and Chicago Assembly Plant which has been on strike since Sept. 15.
Last Thursday, Ford Blue President Kumar Galhotra said that Ford has reached "the limit" of what it can offer to the United Auto Workers for a new labor contract. Ford Blue is the arm of the company focused on traditional ICE (internal combustion engine) vehicles.
But UAW President Shawn Fain responded on X, formerly Twitter, Monday afternoon, saying, "It's not the UAW and Ford against foreign automakers. It's autoworkers everywhere against corporate greed." The union has not lately expanded its strike against GM, citing progress in negotiations.
Ford Stock
Shares of Ford Motor rose nearly 1% to 11.93 on the stock market today. Ford stock remains below the 50-day moving average and near multimonth lows.
GM stock gained 1.4% to 30.07 Monday, near a multi-year low. Chrysler parent Stellantis rose 0.7% to 19.81, close to a buy points of 20.
Tesla stock added 1.1% to 253.92, near a 278.28 buy point and 268.94 early entry, the MarketSmith chart shows. Tesla reports third-quarter earnings on Thursday.
Strike Seen Costing Ford More Than GM
The UAW strikes, which began Sept. 15, have now cost GM and Ford more than $500 million each in lost profits, JP Morgan analyst Ryan Brinkman said in a note Monday. In early October, the analyst had estimated $191 million in strike costs for GM and $145 million for Ford.
But going forward, it's looking worse for Ford, which is now losing $44 million each day vs. $21 million per day for GM, "or more than twice the rate at General Motors," Brinkman estimated on Monday. He cited the Oct. 11 strike expansion to the Kentucky plant, which produces full-size pickups and SUVs.
Last Thursday, Bank of America analyst John Murphy estimated the Kentucky plant shutdown alone will cost Ford $247 million each week in earnings before interest and taxes (EBIT), or $0.05 per share.
That will take the total weekly run-rate impact to $430 million in EBIT, or $0.08 per share, the analyst said. "To put these numbers in context, our Ford 2023 EBIT estimate amounts to $10.7 billion with EPS at $1.96," he added.
As for GM, it has already outlined a $200 million hit to third-quarter earnings from strike costs. The auto giant has established a new, $6 billion credit line as insurance against mounting strike costs.
UAW Strike Threatens EV Shift
Meanwhile, the widening strike threatens the automakers' transition to electric vehicles, analysts warn.
"Reduction in capital spending, delayed EV targets, greater sharing of costs, and other changes to the corporate 'portfolio' could be on the horizon," Morgan Stanley analyst Adam Jonas said in an Oct. 12 note.
This year, GM and Ford have already pared back planned investments in EV and battery plants. They scaled back plans amid an uncertain economy and EV price war.
The UAW strike adds to pressures and has sent Ford stock back near 2022 lows. On Monday, Ford began cutting shifts at its F-150 Lightning plant. It said the move was unrelated to the strike and cited supply-chain issues.
The union says it's fighting for a fair contract.
