UAW Launches Unprecedented Strike Against the Detroit 3Autos & Auto Suppliers
Following the expiry of their existing labour contracts, the United Auto Workers (UAW) announced that they are launching simultaneous strikes against General Motors, Ford Motor Company, and Stellantis N.V.
Key highlights include:
-- While the strike is not unexpected given the wide chasms entering the negotiations, the UAW has never in the past announced simultaneous strikes against the automakers.
-- In any case, the strike is unlikely to shift the direction of the U.S. economy, which nonetheless faces meaningful headwinds and is likely to witness tepid growth over the next two to three quarters.
-- Despite rising interest rates and inflationary pressure, U.S. auto sales remain resilient, benefitting from higher production levels and continued pent-up demand.
“While the UAW strike actions could prove quite costly for the Detroit 3, we currently do not expect such to result in negative credit implications sufficient to result in a change in the ratings on GM, Ford, or Stellantis,” said Robert Streda, Senior Vice President, Diversified Industries at DBRS Morningstar. “The respective liquidity positions of these companies are at strong levels that we believe will be sufficient to absorb any potential cash burn resulting from the strikes.”