UAW's strike against General Motors
Ford Is Reportedly Making Progress But Not On All Issues
On Wednesday, Reuters reported that Ford is making progress in negotiations due to a "comprehensive" new offer it made a day earlier. Reportedly, Ford added "more than 20% general wage increase that is not compounded with a double-digit increase in the first year. However, the UAW and Ford have not reached an agreement regarding other significant issues such as pay and union representation at future battery plants, with UAW also pushing for the reinstatement of retirement plans. On Friday, Ford CFO John Lawler only revealed that the retirement offer will enable UAW workers to retire with $1 million in savings.
GM Seems To Be Embracing For A Long Strike
GM revealed it lost $200 million from the strike that kicked off on September 15th, mainly due to lost production on wholesale volume. The strike began at its midsize truck and full-size van plant in Wentzville, Missouri but has expanded, now including two assembly plants and 20 parts distribution centers. This $200 million cost merely reflects 16 days of the strike during which production was halted at one assembly plant, along with the strike at parts facilities and a consequent production halt at the Fairfax Assembly Plant in Kansas, where it builds the Cadillac XT4 SUV and the Chevrolet Malibu sedan, due to lack of parts. Although this figure translates to an average cost of $12.5 million a day, this figure could sharply rise if the UAW expands the strike, impacting vehicle production.
Due to the strike, GM laid off 2,100 workers at five plants in four states. On Wednesday, Ford announced that 400 more workers will be laid off in Michigan starting Thursday after previously furloughing 930 workers. As for Stellantis, dismissed 370 workers in Ohio and Indiana as a consequence of the strike.
With the obtained line of credit, GM will need to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. As of June 30, GM reported its total automotive liquidity amounted to $38.9 billion. The agreement also restricts GM from getting on new debt as well as from selling assets or engaging in mergers.
At this moment, it is unknown if UAW President Shawn Fain will announce a new round of walkouts on Friday or declare sufficient progress has been made to delay strikes at additional plants but the automakers are clearly bracing for additional and prolonged strikes.
DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.
