24/7 Wall St. Insights
- Ford Motor Co. (NYSE: F) could take a hit from a UAW strike at a critical facility.
- A strike would affect production of the F-150, a key driver of the company’s global profits.
- Also: Dividend legends to hold forever.
Just as it appeared that U.S. sales would help Ford Motor Co. (NYSE: F) regain its footing after difficulties with its electric vehicle (EV) plans, the United Automobile Workers (UAW) could call a strike that might partially undercut production of the F-150. The full-sized pickup represents about 37% of the company’s unit volume. The primary reason for the trouble is that settlement of local UAW contracts often comes well after national agreements between the union and automakers. The national agreement was set late last year.
How Bad Would a Strike Be?
The strike would affect Ford’s Dearborn Tool & Die plant, which has only a few hundred workers. However, CNBC states, “The UAW on Wednesday announced a strike deadline at a Ford Motor tool and die plant that supports the automaker’s Rouge Complex near Detroit – one of two U.S. plants that produce the company’s highly profitable F-150 pickup truck.”
Ford management said the larger UAW settlement reached in November last year would cost it $8.8 billion until it expires in April 2028. The deal included pay raises of approximately 25%.
Ford’s U.S. sales rose 13.4% in August to 182,985. F-150 sales hit 70,701, up 11.7% year over year. The F-Series has been the best-selling vehicle in the United States for 42 years. F-Series sales have been estimated to drive over half of the company’s global profits.
Ford has just begun to recover from a failed foray into the EV market. The company planned to invest $30 billion to gain a significant foothold in the EV business, believing the sector could expand quickly. Overall, EV sales began to slow in the United States, and the Ford EV products were unsuccessful. Ford needs more success in the sales of its gasoline-powered vehicles. A strike could undermine that.
Three Warning Signs Ford Is in Trouble
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