UAW contract negotiations resume. Ford, GM stocks waver.

Shares in Ford and General Motors were mixed early on Monday after talks between the ‘Big Three’ carmakers and the United Auto Workers resumed over the weekend.

The UAW strike began early Friday morning, with the union striking at three facilities, one at each automaker. Workers are on strike at select sectors at General Motors’ (ticker: GM ) Wentzville Assembly in Missouri, Stellantis’ ( STLA ) Jeep assembly complex in Toledo, Ohio, and a Ford ( F ) assembly plant near Detroit.

The union confirmed Baron’s It said it had restarted discussions with Ford over the weekend and said talks were “reasonably productive,” but did not elaborate.

Shares of General Motors, which rose 0.9% on Friday, rose 0.4% in premarket trading, while Ford, which fell 0.1% on Friday, fell 0.2%, erasing earlier gains. Shares of Stellandis fell 1.3% from the open after rising 2.2% on Friday.

Aside from the resumption of negotiations, investors were digesting several developments early Monday.

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In an interview on CBS’ UAW President Shawn Fine rejected Stellandis’ offer of a 21% pay raise. Face the nation Sunday. The Jeep maker made its offer public on Saturday, but Fine said it was “definitely not a go.”

Automakers have also responded to the strikes with temporary layoffs. Ford announced Friday that it has temporarily laid off about 600 non-striking workers at its Michigan plant. General Motors said about 2,000 workers at its Fairfax assembly plant in Kansas could be out of a job this week until production resumes.

Fine said the layoffs were “aimed at pressuring our members to settle for less.” Post on X, formerly of Twitter, Saturday. He said the carmakers’ plan “won’t work”.

Benchmark analyst Michael Ward said the impact of the strikes, heading into a fourth day, was “so far minimal”. However, he noted that parts shortages are expected to close GM’s Fairfax plant and that the UAW may request other facilities to join the strike.

Ward estimated that the strikes, which targeted the three facilities, cost the companies $15 million in Ebit (earnings before interest and taxes) a day.

The relatively low impact is one reason stocks haven’t moved much since the strikes began. Another factor is that “markets fully understand that labor relations are the least of automakers’ long-term concerns,” Nicholas Coles said.

co-founder of Data Trek Research said in a note on Monday.

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Stocks are cheap. Stellantis trades at 3.4 times 2024 earnings, General Motors at 4.9 times and Ford at 6.6 times, according to FactSet data.

“The market feels that their future is very uncertain as the global auto industry transitions to electric and eventually autonomous vehicles. That assessment, in my view, is completely justified,” Colas added.

Write to Callum Keown at [email protected]

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