8.7K Ford Workers Strike: Automaker Faces Possible 36% Stock Plunge
October 13, 2023
Ford’s Kentucky Truck Plant Faces Strike Action
The United Auto Workers (UAW) recently announced a strike involving nearly 8,700 members at Ford Motor’s (F) Kentucky Truck Plant. The strike stems from their failed negotiations. This specific plan, which manufactures the Ford F-Series Super Duty, Ford Expedition, and Lincoln Navigator, holds significant importance to Ford in terms of workforce strength and revenue generation.
In response to the UAW’s decision, Ford labelled the move as “grossly irresponsible yet predictable“, asserting that their proposed agreement would considerably improve living standards for about 57,000 UAW-associated employees.
Strike Provokes Vast Layoffs and Knock-on Effects
This strike has far-reaching consequences, especially concerning layoffs. Remarkably, General Motors (GM), Ford, and Stellantis (STLA) had to furlough around 4,800 workers at plants not directly linked with the strike. They argue these layoffs resulted from a knock-on effect within the manufacturing and supplier network triggered by the strike. However, the UAW retorts that these job losses were tactical maneuvers designed to compel members into accepting less beneficial contract conditions.
The Financial Consequences of Strike & Forecasts
Deutsche Bank had expected enormity of fiscal damage caused by such a comprehensive strike even before its inception. The banking behemoth predicted weekly losses for Detroit’s Big Three—GM, Ford and Chrysler—between $400M-$500M per week owing to halted production. Moreover, Investment Group Leader David Alton Clark forecasts that a deal in UAW’s favour could have substantial financial repercussions for Ford, possibly resulting in dividend cuts and a 36% drop in the stock price. Singular Research predicted a 1% dip in profit margins for GM and Ford, based on an anticipated 30% inflation of labor costs over four years.
Other Strikes On The Rise
Relatedly, strikes are becoming widespread beyond Ford and the UAW. For example, after initiating a strike at three facilities, General Motors and Canadian auto workers reached a tentative labor agreement. This took place shortly after Ford achieved a similar pact with Canadian labor union Unifor. Meanwhile, in Hollywood negotiations between studios and actors collapsed due to disputes over SAG-AFTRA’s latest proposition. Elsewhere in Las Vegas, employees are contemplating strike action against MGM Resorts (MGM) and Caesars Entertainment (CZR) casinos.