Jim
Farley,
CEO,
Ford,
left,
and
Mary
Barra,
CEO,
General
Motors
Reuters;
General
Motors
DETROIT
—
Ready
for
a
tightrope
walk?
General
Motors
and
Ford
Motor
report
third-quarter
earnings
and
future
guidance
this
week
amid
ongoing
strikes
and
contract
negotiations
with
the
United
Auto
Workers
union.
And
it’s
a
difficult
balance.
If
the
automakers
are
bullish
and
exceed
Wall
Street’s
expectations,
it
could
fuel
the
union’s
main
argument
that
the
companies
can
afford
more
concessions
amid
healthy
profits
—
potentially
prolonging
the
work
stoppages
and
contentious
talks.
But
if
the
companies,
which
will
likely
include
many
caveats
in
any
future
comments,
are
too
bearish
on
guidance
or
the
impact
of
UAW
efforts,
they
risk
scaring
Wall
Street
and
denting
their
already
discounted
stock
prices.
GM
is
expected
to
report
third-quarter
earnings
of
$1.88
per
share
before
the
bell
Tuesday,
while
Ford
is
estimated
to
report
earnings
of
45
cents
per
share
after
markets
close
Thursday,
according
to
average
estimates
compiled
by
LSEG,
formerly
known
as
Refinitiv.
While
investors
will
surely
note
the
third-quarter
results,
the
real
watcher
is
expected
to
be
the
effects
of
the
UAW
strike
and
negotiations
on
near-term
earnings
and
longer-term
plans
of
Ford
and
GM,
as
well
as
automaker
Stellantis,
which
the
union
is
also
striking.
The
union
will
be
watching,
too.
Members
of
the
United
Auto
Workers,
or
UAW,
Local
230
and
their
supporters
walk
the
picket
line
in
front
of
the
Chrysler
Corporate
Parts
Division
in
Ontario,
California,
on
Sept.
26,
2023.
Patrick
T.
Fallon
|
AFP
|
Getty
Images
The
UAW
has
consistently
used
earnings
reports
and
commentary
from
executives,
including
GM
CEO
Mary
Barra
and
Ford
CEO
Jim
Farley,
to
promote
its
efforts
and
collective
bargaining.
“When
you’re
in
bargaining
you
want
to
use
every
piece
of
news
that’s
in
your
favor
and
bring
it
up
and
bring
it
to
the
public
and
to
the
table,”
said
Art
Wheaton,
a
labor
professor
at
the
Worker
Institute
at
Cornell
University.
“If
GM,
Ford
and
Stellantis
are
still
very
profitable
for
the
third
quarter,
[UAW’s]
going
to
claim
that,
‘They’re
being
too
cheap
in
bargaining,
and
they
should
give
us
more.'”
The
union
on
Friday
said
there
was
“more
to
be
won”
despite
record
contracts
from
the
automakers.
It
declined,
however,
to
expand
work
stoppages.
Still,
its
targeted
strikes
against
the
three
major
automakers,
which
started
Sept.
15,
are
expected
to
have
more
impact
during
the
fourth
quarter
than
the
prior
three
months.
The
UAW
has
slowly
been
expanding
the
work
stoppages
to
include
additional
assembly
plants
and
distribution
centers.
GM
has
said
the
work
stoppage
cost
it
roughly
$200
million
in
lost
production
in
September.
Ford
and
Stellantis,
which
reports
its
quarterly
results
on
Oct.
31,
have
not
disclosed
their
estimates
of
the
impact
of
the
strikes.
UAW
impact
JPMorgan
estimates
strike
costs
amounted
to
$145
million
at
Ford
and
$191
million
at
GM
in
terms
of
earnings
before
interest
and
taxes
during
the
third
quarter.
Those
losses
are
expected
to
have
ballooned
in
the
fourth
quarter
to
$517
million
for
Ford
—
after
the
union
initiated
a
work
stoppage
at
its
most
profitable
U.S.
truck
plant
in
Kentucky
—
and
$507
million
for
GM.
The
Kentucky
plant
—
responsible
for
$25
billion
in
revenue
annually
—
was
by
far
the
most
crucial
strike
initiated
by
the
union.
It
produces
F-Series
Super
Duty
pickup
trucks
as
well
as
Ford
Expedition
and
Lincoln
Navigator
SUVs.
While
many
analysts
continue
to
view
the
UAW
strike
as
a
short-term
problem,
some
are
acknowledging
that
the
hefty
costs
of
an
eventual
concessionary
deal
could
affect
automakers’
electric
vehicle
plans
and
long-term
competitiveness
compared
with
other,
non-union,
automakers.
United
Auto
Workers
President
Shawn
Fain
during
an
online
broadcast
updating
union
members
on
negotiations
with
the
Detroit
automakers
on
Oct.
6,
2023.
Screenshot
Wolfe
Research
analyst
Rod
Lache
said
Monday
that
labor
costs
for
the
Detroit
automakers,
based
on
recent
proposals,
are
expected
to
increase
to
$3,000
to
$4,000
per
vehicle,
compared
with
competitors’
costs
of
$2,500
to
$3,000.
“This
could
compound
other
challenges
that
the
OEMs
[original
equipment
manufacturers]
face
(e.g.
competitiveness
in
batteries,
distribution,
design).
And
we
also
worry
that
the
OEMs
may
still
not
fully
appreciate
the
long-term
risks
associated
with
UAW’s
new
tack
—
including
bargaining
in
public,
social
media,
and
populism,”
Lache
said
in
an
investor
note.
“The
Automakers
appear
to
be
struggling
to
adjust
to
this
reality.”
The
most
recent
offers
from
GM
and
Ford
have
included
23%
wage
increases
over
the
life
of
the
deal,
reinstatement
of
cost-of-living
adjustments,
additional
vacation
days
and
other
enhancements
compared
with
the
2019
contracts.
EVs
The
negotiations
have
also
had
an
impact
on
electric
vehicles,
which
were
already
selling
more
slowly
than
expected
amid
inflation,
high
interest
rates
and
lack
of
infrastructure.
Ford
last
month
said
it
was
pausing
construction
of
a
new
$3.5
billion
battery
plant
in
Michigan
until
the
company
is
“confident”
in
its
ability
to
competitively
run
the
plant
amid
the
UAW
talks.
And
GM
this
week
said
it
would
delay
production
of
all-electric
trucks
at
a
Michigan
plant
by
at
least
a
year
to
“better
manage
capital
investments”
and
implement
improvements
in
an
effort
to
make
the
new
EVs
more
profitable.
A
GM
spokesman
said
the
change
in
plans
was
not
connected
to
the
company’s
contract
negotiations
with
the
UAW.
However,
the
contentious
talks
do
involve
EVs,
and
current
contract
proposals
by
the
company
are
expected
to
be
more
expensive
than
those
in
years
past.
Wall
Street
will
be
watching
for
updates
on
EV
progress
and
demand.
Even
Tesla
CEO
Elon
Musk,
whose
company
leads
EV
sales,
was
cautious
regarding
demand
for
electric
vehicles
when
Tesla
reported
earnings
last
week.
“I’m
worried
about
the
high
interest
rate
environment
we’re
in,”
Musk
said.
“If
interest
rates
remain
high
or
if
they
go
even
higher,
it’s
that
much
harder
for
people
to
buy
the
car.”
—
CNBC’s
Michael
Bloom
contributed
to
this
report.
