The United Auto Workers (UAW), which represents most Ford Motor Co. (NYSE: F) assembly line workers in the United States, could call a strike as soon as next month. It could shutter plants and put Ford in a position where it lacks inventory to send to dealers. (These companies have the worst reputations.)
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The union’s requests are also crippling financially. The union, which represents 146,000 workers at Ford, General Motors and Stellantis, wants a 40% wage hike spread over four years. Reuters has reported that this would drive labor costs per hour from $60 to $150 an hour.
How long could the UAW shut down Ford’s assembly line? The union says it has a strike fund of $825 billion. The threat to car company profits is real because workers could stay out on strike for months.
An increase in wages would go beyond hurting the Big Three financially. Rivals like Tesla do not have to contend with unions. That keeps labor costs low. The electric vehicle business has seen profits undermined due to a price war, started by Tesla. The difference in labor costs, which is already large, will get larger. Tesla’s advantage at the bottom line will grow.
Investors will pay a price as well. Ford’s stock has dropped by double digits in the past month. A labor stoppage would make that worse. It would not only damage P&L figures. It would mean Ford’s attempts to get EVs into the market to compete with Tesla could eventually be undermined.
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