General Motors slides as UAW workers strike
General Motors shares were down more than 4 percent Monday after roughly 49,000 United Auto Workers union members went on strike in a fight they say is aimed at securing higher wages and better benefits.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| GM | GENERAL MOTORS CO. | 55.60 | +0.81 | +1.49% |
The strike, which is the first by UAW members in 12 years, has the potential to inflict more pain on Detroit's big three automakers, which were already worried about an industry slowdown.
"The longer it lasts, the more it will be felt in GM's earnings profile," Credit Suisse analyst Dan Levy said in a note to clients. "The strike potentially could dampen the earnings, and at the very least is an optical negative and a reminder of the challenges of investing in automakers at this point in the cycle."
He says GM could see up to $50 million of daily earnings evaporate as a result of the strike.
On a recent call with UBS analysts, UAW expert Kristin Dziczek predicted a strike at GM could last two weeks while adding that Detroit's other big automakers (Fiat Chrysler and Ford) also face strike risks.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| F | FORD MOTOR CO. | 11.10 | -0.01 | -0.05% |
| FCAU | NO DATA AVAILABLE | - | - | - |
"We think the D3 have enough inventory (85-79 days) to manage a 2 week strike without a large sales impact; however production may not be recouped by year-end at highly utilized plants," the UBS analysts wrote.
They believe one week of lost production would take approximately 15,000 units off the market. That would erase 10 cents a share from the company's full-year earnings, which were guided between $6.50 and $7.
The big 3 automakers have been forced to make major changes in recent years due to "an unprecedented pace of change relating to vehicle electrification, autonomous driving, ride sharing, and increasingly burdensome emission regulations," acccording to the ratings agency Moody's. Last week, Moody's downgraded Ford to "junk."
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GM shares were up 16.2 percent this year through Friday.