The automobile strike in the United States left Detroit’s big three with a big bill. Companies have lost production and sales. General Motors and Ford’s third-quarter financial statements, reported last week, confirmed this and are awaiting publication by Stellantis this week. In addition, companies on the stock market were severely punished. In six weeks of strike, they lost around $22 billion (around €20,850 million) in value on the stock market.
Ford and Stellantis reached deals with unions last week that include steep pay increases and other labor concessions that will impact the companies’ cost structures. Negotiations with General Motors also appeared to be on track, but collapsed at the last minute and the United Auto Workers union decided on Saturday to extend the strike to a new factory to increase pressure. The 4,000 workers at the Spring Hill (Tennessee) plant, which assembles Cadillac SUV models and makes engines for car assembly at the company’s other plants, have joined the strike.
General Motors has offered to meet the minimum 25% raise sought by workers at Ford and Stellantis within four and a half years, but negotiations have stalled on other issues. In the two agreements reached, the increase comes with further compensation for the increased cost of living, a relaxation of the double pay scale, job security guarantees and other concessions intended to compensate workers for the sacrifices made in the Great Recession to save companies. His viability was therefore at risk. They were now living in a time of record sales and profits.
The two companies most affected by the stock market penalty are Ford and General Motors, with drops of about 20%, while Stellantis, which is less dependent on the US market, has withstood the rate better and its price in the six cases only down 4% has been weeks of conflict. The direct costs of the strike do not outweigh as much as the changed cost structures and the loss of profitability that the new agreements mean for companies, at a time when the switch to electric cars also requires large investments.
Since September 14, the day before the strike began, Ford shares on the stock market have suffered a 21% decline, from $12.62 per share to $9.96. This means that the company has lost around $10.6 billion in market capitalization, to now $39.9 billion. Ford said Thursday that it is withdrawing its full-year profit forecast to assess the impact of the strike and the new labor agreement with the United Auto Workers (UAW) on its balance sheets. Additionally, the results fell short of analysts’ forecasts.
General Motors also decided to withdraw its forecasts last week. The company acknowledged that the strike had already left it with an $800 million bill in six weeks and estimated the cost of the conflict at $200 million a week if it continued. The company’s shares fell 19% on the stock market during the strike period, from $33.66 to $27.22. This reduced the company’s market value by around $8.8 billion to $37.3 billion, which the company had at the close of trading on Friday. The company also announced a slowdown in its investment in electric cars. “We are moderating the acceleration of electric vehicle production in North America to protect our prices, adapt to slower demand growth in the near term, and implement technical and other efficiency improvements that make purchasing our vehicles more cost-effective and profitable,” the CEO said at the Presentation of results.
Stellantis has now been able to withstand the pressure on the stock market better. The company, created from the merger of Fiat Chrysler and PSA, brings together not only the American brands Chrysler, Dodge and Jeep, but also European brands that have a great weight in the group, such as Fiat, Peugeot, Citroën, Opel, Alfa Romeo, Lancia and Maserati. Its shares, listed on various markets, fell just over 4% during the strike, resulting in a decline in capitalization of about $2.6 billion.
The three companies have a combined market capitalization of around $140 billion, half as much as Japan’s Toyota and a far cry from Tesla, the industry leader by market value. The company led by Elon Musk has a market capitalization of around $650 billion.
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