Ford Gets Edge as UAW Retreats

It appears less likely that Ford will face a catastrophic strike by the United Auto Workers (UAW) union. Its rivals General Motors and Stellantis may also avoid severe financial damage. The UAW wanted a 46% wage increase over four years. That would have thinned margins at the manufacturers substantially. (These American jobs had zero union members last year.)

The Wall Street Journal reports that the UAW wage increase of the four years is now in the mid-30s range. That is enough of a concession that the UAW is headed toward demands it is more likely the car companies can stomach. Specifically, the Wall Street Journal reports, “It is the first visible sign of progress on the wage issue since the sides began talks in earnest in July.”

Ford’s stock has suffered, particularly because of the specter of a strike. It has fallen 11% in the past three months.

Ford has spent billions of dollars gambling it can be a force in the electric vehicle (EV) market. The jury on that position may be out for over a year. Ford has already pushed back its ambitious plans. First, management said Ford could produce 600,000 EVs at the end of this year. That target has been pushed to the end of 2024.

Ford will need a lot of money in the bank in the next few years. Several surveys show that many Americans do not want to buy an EV. Many worry that there are too few charging stations and that the cars can take hours to charge.

In the meantime, Tesla, by far the EV market share leader, has cut prices to challenge pricing by Ford. Tesla can afford to cut its margins because it is profitable. Ford does not enjoy a similar option.

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A reprieve from the most aggressive UAW requests will help Ford financially. However, it will still need to pay workers more over the next several years. Tesla will not.

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