Stellantis
is the latest of the Detroit Three auto makers to be hit with more walkouts.
This one hurts.
The union said Monday it was on strike at the Sterling Heights Assembly Plant in Michigan, which makes Dodge RAM 1500 pickup trucks. Trucks are a significant source of profits for the Detroit car companies.
Stellantis
(ticker: STLA) says it has a strong offer on the table and that it was “outraged” by the strike expansion. “The UAW’s continued disturbing strategy of wounding all the Detroit-Three will have long-lasting consequences,” said the company in an emailed statement. “With every decision to strike, the UAW sacrifices domestic market share to nonunion competition. These actions not only decrease our market share, but also impact our profitability and therefore, our ability to compete, invest and preserve the record profit-sharing payments our employees have enjoyed over the past two years.”
About 14,000 Stellantis workers now are on strike. That brings the total for the Detroit Three to about 40,000 out of roughly 145,000. Several thousand more have been laid off at all three auto makers due to disruptions to the production environment.
Stellantis stock was up 0.3% on Monday. The
S&P 500
and
Dow Jones Industrial Average
fell 0.2% and 0.6%, respectively.
The stock rising might be a surprise, but it’s consistent with recent trading. Stellantis shares have gained about 9% since the start of July, when labor issues came to the fore.
Ford Motor
(F) and
General Motors
(GM) shares have dropped more than 20%.
Stellantis is a more global company than its two Detroit peers. It’s relatively less affected by the UAW strike. It’s also a cheaper stock trading for less than 4 times estimated 2024 earnings. Ford and GM shares trade for less than 7 times and 5 times, respectively.
UAW President Shawn Fain last Friday said that he wouldn’t wait until regularly scheduled Friday updates to announce strike expansions. He’s expanded the strike a couple of times that way in the recent past. He made good on his promise.
Fain also said Friday that the union has been making progress at all three auto makers. But he believed there was more the companies could give. The strike expansion at Stellantis was evidence he still feels that way.
The strike began on Sept. 15, with UAW members walking out at three assembly plants. One at each of the three auto makers. The strike, now 38 days, has ramped up in intensity lately.
Before walking out at the Sterling Heights plant, the UAW walked out of Ford’s Kentucky Truck Plant, Ford’s largest in the world that generates about $25 billion in annual sales.
Recent events don’t give investors any idea when the strike may end. Progress gets made and then more workers go out on strike. It’s a confusing time for auto investors. They have dealt with it by avoiding shares of GM and Ford.
Write to Al Root at allen.root@dowjones.com
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