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In a surprising turn of events, Ford Motor has decided to laysoff approximately 600 workers at its Michigan assembly plant during an ongoing strike by the United Auto Workers (UAW). Here’s a closer look at this unfolding situation.
UAW Strike Targets Specific Plant Areas
The UAW strike, under the guidance of UAW President Shawn Fain, is primarily focused on the paint shop and final assembly sections of the Michigan plant. As a result, Ford found it increasingly impractical to continue plant operations, particularly for the production of Ford Rangers and Broncos.
Contract Expiration Adds Tension on Ford LaysOff
Complicating matters further, the contracts between UAW and major automakers, including Ford, General Motors (GM), and Stellantis, expired recently, leaving negotiations hanging in the balance.
Selective Strikes Raise Eyebrows
This strike marks a significant departure from previous labor actions, as the UAW has chosen to target specific facilities, including Ford’s Wayne, Mich. assembly plant, a GM facility in Wentzville, Mo., and a Stellantis assembly complex in Toledo, Ohio. This simultaneous targeting of all three major Detroit automakers is a strategic shift for the union.
Analysts Express Concerns
Baird analyst Luke Junk expressed concerns over the strike’s potential to escalate beyond its initial scope. Initially, he expected the UAW to target engine and transmission plants, which could have paralyzed all North American operations. “The situation could worsen from here,” Junk warned.
A Reminder of the 2019 Strike
This labor strike in 2023 serves as a reminder of the 2019 strike against GM, which lasted for approximately 40 days and cost the company an estimated $3.6 billion in operating profit. GM’s 2020 performance was also affected by the strike, but the exact recovery remains uncertain due to the subsequent impact of the COVID-19 pandemic.
GM’s Profitable Streak
Despite the 2019 strike, GM has managed to maintain profitability since then, reporting operating profits of $14.3 billion in 2021 and $14.5 billion in 2022. The management expects to achieve approximately $13 billion in operating profit for 2023, barring any further strike-related setbacks.
GM’s experience during the 2019 strike provides valuable insights for investors navigating the 2023 UAW labor stoppage.
Disclaimer: This article serves solely for informational purposes and should not be construe as financial advice. Thus, we strongly advise readers to conduct thorough research and consult with financial professionals before making any investment decisions.
