If these automotive giants come out optimistic and surpass Wall Street’s forecasts, it might stoke the UAW’s claims that these corporations can easily make more concessions given their robust earnings. Such an outcome could further stretch the already tense work halts and discussions.
On the other hand, too much caution in their outlook or emphasizing the adverse effects of UAW actions could unsettle investors and potentially bruise their somewhat undervalued stock prices.
Expected Earnings and Market Predictions
It’s anticipated that GM will disclose Q3 earnings of $1.88 per share early on Tuesday. Meanwhile, Ford’s predicted numbers stand at 45 cents per share, set to be announced post market hours on Thursday. These estimates stem from averages compiled by LSEG, previously known as Refinitiv.
Investors will undeniably be eyeing these third-quarter figures. However, the spotlight will likely shine on the ongoing UAW strikes’ implications on the short-term earnings and long-term objectives of both Ford and GM, not forgetting Stellantis, which also faces UAW strikes.
UAW’s Watchful Eye and Tactical Moves
UAW isn’t just a bystander; it’s an active participant monitoring these earnings. Historically, they’ve leveraged such financial reports and senior management statements—like those from GM’s CEO Mary Barra and Ford’s CEO Jim Farley—as a tool for their union efforts and negotiations.
As Art Wheaton, a labor-focused academic from the Worker Institute at Cornell University, rightly said, “If GM, Ford, and Stellantis maintain high profitability in Q3, the UAW will undoubtedly argue that they’re not being fair in their negotiations.”
Despite the automakers offering record contracts, the union expressed that there’s “more to gain.” However, they opted not to escalate work halts. The targeted pauses against these top automotive companies, which kick-started on September 15th, are projected to influence Q4 more than Q3. There’s a noted gradual increase in halted operations spanning more assembly plants and distribution hubs.
Economic Implications of the Strikes
GM has been vocal about the strike’s financial sting, citing a whopping $200 million loss in September’s production. Contrarily, Ford and Stellantis, due to report on October 31st, have kept mum on their estimated losses due to these strikes.
The UAW’s Growing Financial Impact
With JPMorgan’s estimates, Ford and GM’s strike-associated costs in Q3 reached $145 million and $191 million respectively, based on earnings before interest and taxes. These figures are forecasted to surge in Q4—with Ford’s rising to $517 million, primarily due to the union’s strike at their chief U.S. truck facility in Kentucky, and GM’s climbing to $507 million.
The Kentucky plant, generating a staggering $25 billion annually and manufacturing the F-Series Super Duty trucks and other premium SUVs, was undeniably the UAW’s most strategic strike choice.
While many analysts view the UAW strike as a fleeting hiccup, a growing chorus believes that the weighty financial repercussions of a potential agreement might derail automakers’ plans for electric vehicles and impede their long-term competitive edge against other non-union automotive manufacturers.