As the UAW plays hardball in Detroit, will GM-Ford merger rumors get a jumpstart?
Brandon Bell
United Auto Workers President Shawn Fain announced on social media on Friday that the union would not expand its strike. However, Fain highlighted that the UAW was done waiting until Fridays to escalate strike efforts because negotiations were stalling until the last day. He dramatically warned that strikes like the action taken against Ford Motor (NYSE:F) on Wednesday at the large truck plant in Kentucky could occur at anytime.
Fain blasted Ford Motor (F) for its recent stance about being at its limit and reported no forward progress in the talks with Stellantis (NYSE:STLA) and General Motors (NYSE:GM).
Analysts on Wall Street do not see any quick fix to the labor battle. Bank of America said it thinks that the Detroit automakers gave significant leeway to UAW requests and further allowances could be financially unsustainable in the longer term. "Recall that the Detroit Three already have the highest cost of labor per hour worked in the automotive industry," noted analyst John Murphy.
The last time the Detroit automakers went to the negotiating table with the UAW for a new contract was in 2019. At that time, the rumor mill went into overdrive that the way out of the labor quagmire might be a mega-merger between General Motors (GM) and Ford Motor (F). In the round before that, General Motors (GM) reportedly turned down a direct offer from Fiat Chrysler Automobile (now Stellantis) in 2015. Both times, the merger rumors impacted shares prices for a short bit. Of course, the difference in 2023 is that both automakers have made a big commitment to electric vehicles, and GM also has the Cruise autonomous driving subsidiary. However, if the UAW strike resets the electric vehicle timetable for the Detroit automakers, there may be some concerns about catching or keeping up with Tesla (TSLA) and other EV upstarts.
Shares of Ford Motor (F) were down 0.67% at 10:50 a.m. on Friday, while General Motors (GM) was down 1.08% and Stellantis (STLA) showed a 0.66% gain. For the year, Stellantis (STLA) is still up 36.2% and Ford (F) is 7.1% higher. General Motors (GM) is down 11.3% on a year-to-date basis.
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