Shares of Ford and General Motors fluctuated early Monday after negotiations between the Big Three automakers and the United Auto Workers resumed over the weekend.
The UAW strike began in the early hours of Friday morning with a union walkout at three plants, one at each automaker. Workers are striking at the General Motors (ticker: GM) Wentzville assembly plant in Missouri, the Stellantis Jeep assembly complex (STLA) in Toledo, Ohio, and select departments at the Ford (F) assembly plant near Detroit.
The union confirmed to Barron’s that it had resumed talks with Ford over the weekend, saying the talks were “quite productive” but did not elaborate.
Shares of General Motors, up 0.9% on Friday, rose 0.4% in premarket trading, while shares of Ford, down 0.1% on Friday, fell 0.2% erased previous gains. Stellantis shares fell 1.3% before the open after rising 2.2% on Friday.
Aside from the resumption of talks, investors digested several other developments early Monday.
Advertisement – Scroll to continue
Perhaps most notably, UAW President Shawn Fain rejected Stellantis’ offer of a 21% raise in an interview on CBS’ “Face the Nation Sunday.” The Jeep maker made its offer public on Saturday, but Fain said it was “definitely a no-go.”
Car manufacturers also responded to the strikes with temporary layoffs. Ford announced Friday that it has temporarily laid off about 600 non-striking workers at its Michigan plant. General Motors said about 2,000 workers at its Fairfax assembly plant in Kansas could be out of work this week until production resumes.
Fain said the layoffs were intended to “pressure our members to settle for less,” in a Post on X, formerly Twitter, Saturday. He added that the automakers’ plan “won’t work.”
Advertisement – Scroll to continue
Benchmark analyst Michael Ward said the impact of the strikes on the industry had been “minimal so far” through the fourth day. However, he noted that parts shortages are expected to lead to the closure of GM’s Fairfax plant and that the UAW could ask other plants to join the strike.
Ward estimated that the strikes against the three facilities will cost the companies a total of $15 million per day in EBIT (earnings before interest and taxes).
This relatively small impact is one reason stocks have barely moved since the strikes began. Another factor could be that markets “fully understand that labor relations are among the least of automakers’ long-term concerns,” Nicholas Colas, co-founder of DataTrek Research, said in a note on Monday.
Advertisement – Scroll to continue
The shares are cheap. According to FactSet data, Stellantis trades at 3.4 times 2024 earnings, General Motors at 4.9 times and Ford at 6.6 times.
“The market believes their future is highly uncertain as the global automotive industry moves to electric and eventually autonomous vehicles. In my opinion, this assessment is completely fair,” Colas added.
Write to Callum Keown at [email protected]