The United Auto Workers is likely to strike this week, Wedbush analysts believe, and it would be a disaster for the big three Detroit automakers.
The UAW is negotiating separately with General Motors Company (NYSE:GM), Ford Motor Company (NYSE:F), and Stellantis NV (NYSE:STLA, EPA:STLA) on a new agreement, but their current contract expires Thursday. With the UAW having already voted to authorize a strike, UAW walkout walking out later this week seems increasingly likely.
Wedbush analysts believe there’s only about a 15% chance a deal is reached in time, according to a note to clients. That’s not good news for the automakers.
“Let's be clear: this is a potential nightmare situation for GM and Ford as both 313 stalwarts are in the early stages of a massive EV transformation path for the next decade that will define future success,” analysts wrote. “In this crucial period of EV execution, model roll-outs, distribution, marketing, with EV competition rising across the board the timing could not be worse.”
A recent trip to Detroit did not inspire confidence.
“We spent time in Detroit a few weeks ago and sense a "very nervous time" across the auto industry as there is a lot riding on these negotiations and with the recent UPS union deal sealed this puts more pressure on the UAW leadership to deliver a big win,” the analysts added.
Last week, GM offered a new contract that included a 10% increase in hourly wages — well short of the 40% increase across the life of the contract that the union is asking. Ford offered 9% general wage, and Stellantis offered 14.5%.
That discord aside, Wedbush said it remains bullish on GM to navigate the situation and reiterated its Buy rating on the company.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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