Ford Motor Co. (NYSE: F) shares have fallen 20% in the past month. Among the primary reasons are negotiations with the United Auto Workers. Across America’s car companies, Bloomberg puts the potential cost of labor contracts at $80 billion. That is much to absorb, even for one of the country’s largest industries. (These are America’s 25 dying industries.)
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The negotiation is risky. A UAW strike could cost the car companies production when sales are solid. While the risk is large, the wage increase the UAW has asked for is over 40%. The union has also asked for better benefits for tens of thousands of workers.

The trouble comes when car makers are amid multi-billion makeovers to prepare for what they view as an electric vehicle (EV) future. This means changes in product design, factories and marketing. None of the large car companies has the background to help with the transformation. They still rely on gasoline-powered vehicle sales for over 95% of their revenue.

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Any labor cost increases will also happen when car companies do not know if EV sales will be strong in the next several years. No one knows for certain what the demand for EVs will be. Many Americans say they will not buy one. They are worried about a dearth of charging stations and by a lack of understanding of how EVs work.

The UAW’s battles for the future of its members have dogged car companies for almost a century. Large strikes have brought the industry to its knees before. Although the confrontations between labor and management are no longer violent as they once were, the threat to car company financials is just as bracing.

Ford’s shares should be down. The stock will drop even further if the UAW negotiations are not resolved soon.

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