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<\/span><\/a>Impact of the 2019 UAW strike on General Motors<\/span><\/h2>\n\n\n\n
On 15 September 2019, UAW members initiated a strike<\/a> involving nearly 48,000 workers of 50 facilities across the US. Their demands included wage increases, retention of healthcare benefits, enhanced job security, and the opportunity for temporary workers to transition to permanent employment status.
The strike lasted until 25 October 2019, when the union’s demands were met by the automotive giant. It is important to stress that the strike led to the temporary closure of GM facilities in Canada and Mexico. The company’s suppliers had to lay off approximately 12,000 employees. General Motors Company’s Q3<\/a> and Q4<\/a> 2019 reports reflected the impact of the strike on the financial performance: total losses for the two quarters reached 4.6 billion USD.<\/p>\n\n\n\n
On 15 September 2019, General Motors Company shares lost 1.7% and continued to decline, with stock prices<\/a> dropping 13.1% by 8 October. The quotes failed to restore their positions by the end of 2019. With the onset of the COVID-19 crisis in 2020, stock values continued to fall and only managed to return to their pre-strike level of 38 USD per unit by November 2020.<\/p>\n\n\n\n
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<\/span><\/a>Potential impact of the United Auto Workers strike on Ford and GM<\/span><\/h2>\n\n\n\n
The UAW strike that began in September 2023, may have a negative impact on the automakers’ business and the overall US economy. According to research<\/a> by Harbour Results, based on the 2022 results, 30% of 400 small and medium-sized manufacturers that are suppliers of the Big Three are in a vulnerable financial position, while another 21% are in a moderate position. A total of 84% of these companies forecast a decrease in revenue in 2023.
A prolonged strike by auto workers poses significant risk to such companies, particularly now that the Federal Reserve has raised the interest rate to 5.5%. In such circumstances, borrowing costs have increased substantially compared to the statistics from 2019 when the rate stood at 2.5% and lower.<\/p>\n\n\n\n
In this situation, suppliers to automakers, facing bankruptcy, may start reducing costs and laying off employees. The unemployment rate might increase, and the income and expenses of workers and their families could decline. This is likely to create negative conditions for local businesses and decrease tax revenues. In addition, the strike could harm the reputation and competitiveness of the US automobile industry.<\/p>\n\n\n\n
According to Goldman Sachs<\/a>, General Motors Company, Ford Motor Company, and Stellantis N.V. may incur losses of 100-150 million USD per week due to the strike. As the GM experience in 2019 shows, the overall losses could amount to billions.<\/p>\n\n\n\n
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<\/span><\/a>Who could benefit from the conflict between the Big Three and the UAW?<\/span><\/h2>\n\n\n\n
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Tesla Inc.<\/a> (NASDAQ: TSLA) employees are not members of the United Auto Workers<\/li>\n\n\n\n
According to Business Insider<\/a>, at the time of writing, the hourly wage for a Tesla Inc. plant worker was 45 USD, nearly 20 USD lower than hourly wages at the facilities of General Motors Company, Ford Motor Company, and Stellantis N.V.<\/li>\n\n\n\n
If the Big Three automakers satisfy the demands of the UAW and increase the wages of specialists involved in electric vehicle production, it could lead to higher prices for the electric vehicles produced by these companies. In this scenario, the competitiveness of General Motors Company, Ford Motor Company, and Stellantis N.V. may decrease in both the domestic and international markets<\/li>\n\n\n\n
The use of the innovative EV production system Giga Press allows Tesla Inc. to reduce production costs. Furthermore, during an investor event<\/a> in March 2023, Elon Musk announced that Tesla would halve next-generation EV production costs, primarily thanks to the use of innovative production technologies and the development of smaller plants. It is easier and quicker to upgrade or launch smaller production facilities rather than large plants<\/li>\n<\/ul>\n\n\n\n
<\/span>Ford stock live price chart<\/span><\/h2>\n\n\n
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