Wall Street analysts are viewing potential strikes by the UAW union against the Detroit automakers as largely manageable, even investment opportunities.
, collectively known as the Detroit automakers, or D-3, can handle such work stoppages and expected labor cost increases. The companies and the union are bargaining contracts for 146,000 union members ahead of an 11:59 p.m. ET Thursday deadline.
"Our theoretical math suggests that labor cost increases should largely be manageable for the D-3. Further, a work stoppage should keep inventories low and support prices staying elevated, which should be a near term offset for higher wages," RBC Capital Markets analyst Tom Narayan said Thursday in an investor note.
Using Ford, which has the most UAW employees at 57,000, as an example, RBC estimated margin impacts for 10% and 20% raises for union workers would be 0.39% and 0.79%, respectively. That doesn't factor in potential bonuses and other possible changes such as cost-of-living-adjustments, which the union has made a priority.
What"matters most" is the duration of a potential strike, Jefferies analyst Philippe Houchois said. In an investor note Monday, he estimates each week of a strike could account for 4% to 5% of adjusted earnings at Ford; 3% to 4% at GM; and 1.5% to 2% at Stellantis.
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