UAW Auto Strike Could Send Three Firms into Bankruptcy

The U.S. United Auto Workers are asking for too much. General Motors (GM) offered a generous 10% wage increase during a new four-year contract. It also offered two more 3% one-time payments.

GM will even throw in $6,000 as an inflation payment and $5,000 more in lump sums. Plus, add $5,000 for a contract ratification bonus.

UAW rejected the deal. It wants an unaffordable 46% pay raise over four years. It also wants a 32-hour work week on 40 hours of pay. That implies a 20% pay raise on top.

Ford (F) offered a 15% combined wage increase, more benefits, and lump sum payments. The average wage would increase to an incredible $92,000, up from $78,000. Despite those higher costs hurting Ford’s already weakening profit margins, the UAW rejected it.

Stellantis (STLA) offered a 14.5% wage increase over four years to around 43,000 workers. The UAW rejected it.

All three firms have severe cost headwinds ahead, regardless of the wage deal. They do not sell EVs at a profit. The rising losses, falling cash flow, and weak demand ahead due to the recession could bankrupt these three firms.

None of the firms are attractive at this time.

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