Ford, General Motors and Chrysler-Jeep parent Stellantis are officially on strike watch. The United Auto Workers (UAW) union has promised the three companies picket lines if new labor agreements are not settled before contract expirations at 11:59 p.m. on Sept. 14.
UAW President Shawn Fain told The Associated Press Wednesday the union, which represents 150,000 autoworkers, plans to go on strike against any of the three companies if there isn't an agreement on a new contract by next Thursday.
Fain added that Ford and GM are making some progress in negotiations, while Netherlands-based Stellantis has yet to make a counter offer on a wage and benefits package.
Ford stock, General Motors stock and Stellantis stock lost ground in market trade Thursday. Ahead of a possible auto strike, the 35 stocks in the IBD Auto Manufacturers industry group have collectively advanced 45% in 2023. The auto group ranks a strong No. 9 out of the 197 industries tracked by IBD, according to MarketSmith.
GM And Ford Could Be Hit Hardest
CFRA analyst Garrett Nelson wrote Tuesday he expects an auto strike could potentially last several weeks. Meanwhile, Citi has estimated a potential two-week auto strike could hit GM profits by $1.3 billion. The firm predicts Ford could take a $1.6 billion hit to its bottom line.
"The two sides appear very far apart on a host of issues, and the UAW's $825 million strike fund and newly-increased strike pay could prolong the standoff," Nelson wrote.
The analyst added that an auto strike "would hurt General Motors the most, followed by Ford and Stellantis."
"A strike could also cause U.S. new vehicle prices to move higher and boost sales of both import brands and used vehicles, while certain auto suppliers and retailers could be hurt," the analyst added.
Will The Auto Strike Impact EVs?
Wedbush analyst Dan Ives told investors Wednesday that "there is a very likely chance" an auto strike could take place.
Ives added this is a "potential nightmare situation for GM and Ford" as the two U.S. auto giants are in the "early stages of a massive EV transformation path for the next decade that will define future success."
"In this crucial period of EV execution, model rollouts, distribution, marketing, and with EV competition rising across the board, the timing could not be worse," Ives said.
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The union is pushing for a 40% hourly pay increase, a reduced 32-hour workweek, among other proposals. Ives wrote Wednesday the big issue for GM, Ford and investors is the 40% wage increase.
"This will be a major headwind on the cost front and ultimately in some way be passed down to the consumer and thru EV prices," Ives said.
Meanwhile, Nelson and Ives see Tesla as potentially getting a boost from a strike.
The nonunion Tesla is already in a position of strength in the U.S. EV market and worker strikes at either GM or Ford could widen the gap, according to Ives.
"Tesla screens as the biggest winner," Nelson said.
Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.
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