Benzinga - by Shanthi Rexaline, Benzinga Editor.
The United Auto Workers on Friday announced that 97% of members belonging to the Detroit "Big Three" automakers — namely General Motors Corp. (NYSE:GM), Ford Motor Co. (NYSE:F) and Stellantis N.V. (NYSE:STLA) — have authorized a strike if the automakers do not give a fair deal.
What Happened: If the UAW strikes, it would be a “gut punch” to the Detroit stalwarts GM and Ford. Both manufacturers are in the midst of a massive and important electric vehicle (EV) transformation, Wedbush analyst Daniel Ives noted in a social media post.
“This is a delicate balancing act for both [Mary] Barra and [Jim] Farley to navigate,” the analyst said. A strike would cause EV disruption, which is a big worry now, he added.
The strike authorization vote is a procedural step in negotiations. And the results, announced Friday, are historically high. However, the vote does not necessarily mean there will be a strike, CNBC reported.
Why It's Important: The development comes amid a challenging backdrop for automakers. As economic conditions continue to be uncertain, a cautious consumer is reluctant to splurge on discretionary spending such as autos.
The legacy automakers’ EV transition is difficult. They must contend with Tesla Inc (NASDAQ:TSLA), Nio Inc (NYSE:NIO), Rivian Automotive Inc (NASDAQ:RIVN), VinFast Auto Ltd (NASDAQ:VFS) and others.
The UAW is clamoring for an ambitious goal of getting contract provisions it gave up during negotiations in 2007 when the legacy automakers were facing precarious financial conditions. This would mean reinstating a retirement plan that would guarantee retirees a sum of money every month they live post-retirement.
Among the other demands are reinstating retiree health coverage for new hires and a return of cost-of-living adjustments to protect workers from inflation. Yielding to the demands will likely impact the profitability of automakers at a time when they are unable to boost topline in a big way.
GM ended Friday’s session up 0.21% $32.95, Ford rose 1.36% to $11.91 and Stellantis gained 1.79% to $18.18, according to Benzinga Pro data.
Read Next: Henry Ford’s ‘Any Color As Long As It’s Black’ Is History. Blue Oval Now Presents The F-150 Electric Pickup In Chic Matte Black
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