ford (F) Executive Chairman Bill Ford called for an end to the escalating UAW strike Monday morning, but Wall Street pointed to an even bigger hit to Ford’s bottom line. Ford stock rose.
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In an unusual media conference, Henry Ford, the former CEO and great-grandson of the company’s founder, announced his plans to invest in Ford’s Kentucky plant, which manufactures highly profitable trucks such as the F-150 Super Duty. He mentioned last week’s escalation of the UAW strike.
Ford said at a news conference that if the UAW strike continues, it will have a “significant impact on the U.S. economy and will devastate local communities.” “The supply base is very vulnerable and if the attack drags on it will start to collapse, but it doesn’t have to.”
He also warned that the strikes were hurting Ford. general motors (GM) and Stellantis (STLA) Meanwhile, non-unionized rivals are: tesla (TSLA) and foreign automakers “love this strike” and will win.
The automaker told more than 550 employees at six Ford plants not to come to work Monday. He cited the ripple effects of strikes at a Kentucky truck plant and a Chicago assembly plant, where strikes have been ongoing since September 15th.
Last Thursday, Ford Blue President Kumar Galhotra said Ford had reached the “limits” of what it could offer the United Auto Workers union a new labor contract. Ford Blue is the company’s hands-free driving feature.
The union has not recently expanded its strike against GM, citing progress in negotiations.
ford stocks
On the stock market that day, Ford Motor’s stock price rose nearly 1% to 11.93. Ford stock remains below its 50-day moving average and near multi-month lows.
GM stock rose 1.4% on Monday, also near its lows. Chrysler’s parent company Stellantis rose 0.6% to 19.80, close to 20 buy points.
Tesla stock rose 0.7% to 252.93, near a buy point of 278.28 and an early entry of 268.94, according to MarketSmith charts. Tesla will announce its third quarter results on Thursday.
Strike likely hurts Ford more than GM
JPMorgan analyst Ryan Brinkman said in a note Monday that GM and Ford each suffered more than $500 million in lost profits due to the UAW strike, which began Sept. 15. In early October, analysts estimated the strike would cost GM $191 million and Ford $145 million.
But the future looks even worse for Ford, with Ford currently losing $44 million a day compared to GM’s $21 million a day, “more than twice as much as General Motors.” Brinkman estimated Monday. He was referring to an expanded strike on Oct. 11 at a Kentucky plant that makes full-size pickups and SUVs.
Last Thursday, Bank of America analyst John Murphy said that the Kentucky plant closure alone could cost Ford $247 million in weekly earnings before interest and taxes (EBIT), or $0.05 per share. It was estimated that there would be a loss.
This would have a total weekly run rate impact of $430 million in EBIT or $0.08 per share, analysts said. “To put these numbers into context, Ford’s 2023 EBIT forecast is $10.7 billion and EPS of $1.96,” he added.
As for GM, it has already outlined a $200 million hit to third-quarter earnings from strike costs. The auto giant has set up a new $6 billion line of credit as insurance against mounting strike costs.
UAW strike threatens EV shift
Meanwhile, analysts have warned that the growing strike threatens automakers’ transition to electric vehicles.
“Reductions in capital spending, delays in EV targets, increased cost sharing and other changes to companies’ ‘portfolios’ are on the horizon,” Morgan Stanley analyst Adam Jonas wrote in an Oct. 12 note. There may be,” he said.
GM and Ford have already cut planned investments in EV and battery factories this year. In the wake of economic uncertainty and the EV price war, they scaled back their plans.
The UAW strike added to the pressure, sending Ford stock back near its 2022 lows. Ford began reducing shifts at its F-150 Lightning plant on Monday. The company said the action was unrelated to the strike and cited problems in its supply chain.
The union says it is fighting for a fair contract.
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