UAW strike is costing Big Three about $125 million each in lost revenue, Goldman Sachs says

By Claudia Assis

Next wave of strikes could hit factories making large pickup trucks

The United Auto Workers strike at Ford Motor Co., General Motors Co. and Stellantis NV plants is costing each of the Big Three automakers around $100 million to $125 million a week in delayed revenue, analysts at Goldman Sachs said in a note Tuesday.

That's based on the affected factories' weekly production and the specific models that were being made at the plants, said the analysts, led by Mark Delaney.

Related:Tesla may be the winner of the Big Three labor woes

Shares of Ford (F), GM (GM) and Stellantis (STLAM.MI) traded higher on Tuesday amid losses for the S&P 500 SPX and the Dow Jones Industrial Average DJIA.

Workers are striking at a Michigan Ford plant making Broncos and Rangers, a Missouri GM plant making GMC Canyons and Colorados and an Ohio Stellantis plant making Jeep Wranglers and Gladiators.

        Factory           Number of workers on strike  Average weekly production 
  GM, Wentzville, Mo.                3,600                       3,650 
   Ford, Wayne, Mich.                3,300                       4,000 
Stellantis, Toledo, Ohio             5,800                       6,600 

Nearly 13,000 workers are on strike, with GM warning last week it might run out of parts at a factory in Kansas making the Chevy Malibu and Ford confirming, also last week, that it has laid off about 600 workers at its Wayne, Mich., plant as the result of a domino effect.

UAW President Shawn Fain said that the union is prepared to call for strikes at additional factories if there's no progress in the negotiations by Friday.

The UAW broke with its longstanding tradition of striking at one company at a time, instead electing to strike at specific plants of all three automakers.

Wall Street has worried about the strike spreading to plants where the Big Three make their high-margin pickup trucks.

The factories targeted for the first labor actions make midsize pickups and SUVs, which are also profitable models. This strategy still leaves "the UAW with the more profitable truck plants as leverage if negotiations don't progress," Dan Levy at Barclays said in a note Tuesday.

"We assume the next wave of strikes could begin to involve some of the large pickup plants," Levy said.

Large pickup trucks "are the profit engines for the [Big Three]. For Ford and GM, large pickups generally carry a much higher variable profit per unit than the aggregate lineup," Levy said.

Large trucks carry a variable profit per unit of around $15,000 per vehicle, compared with an average profit per vehicle of $9,000 to $10,000. Large pickup trucks and large SUVs "account for substantially all of the profit of Ford and GM," the analyst said.

-Claudia Assis

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09-19-23 1247ET

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