When the United Auto Workers demanded a 40% wage increase it set up a confrontation with General Motors (GM). The UAW also wanted 40 hours of pay for 32 hours worked, an impossible demand. Ford (F) countered UAW with a decent wage increase package. So did GM.
UAW rejected the deal, calling a strike for the first time among all auto workers. Stepping back to consider all three firms. Stellantis (STLA) is the best positioned to negotiate with its workers. Previously, the maker of Jeep, Chrysler, and Dodge in North America negotiated up to $15 billion in incentives with Canada. Canada will subsidize the building of a battery plant development.
Ford has serious issues ahead. Its electric vehicles are not competitive. Rivian (RIVN) sells more truck EVs than Ford, while the Mach-E continues to lag in sales. Ford expects losses in the billions in the EV unit.
GM has similar issues. It canceled the Bolt EV. The inexpensive, mainstream EV is the ticket to growing market share. Once management realized its value, GM resumed sales. Unfortunately, its Cadillac unit sells EVs at a price point that people cannot afford.
Be wary of Ford and GM. They will likely give in to the UAW’s demands. This increases costs and will push the firm to a path of annual losses.
