Shares of Detroit Three fall as US auto workers begin strike
Reuters · 09/15 09:21
Shares of Detroit Three fall as US auto workers begin strike

- Shares of U.S. automakers Ford Motor Co F.N and General Motors GM.N fell 2% before the bell on Friday after a strike by unionized workers at three plants making some of their most profitable pick-up trucks.

The U.S.-listed shares of Chrysler-owner Stellantis also edged down 0.5% premarket after a walkout by hourly workers, represented by United Auto Workers (UAW), at its Toledo, Ohio assembly plant where it makes the Jeep Wrangler and Gladiator.

Stellantis' Milan-listed shares reversed course, climbing 0.5% in the morning trade.

The escalation came as talks between the UAW and the 'Detroit Three' automakers are yet to result in an agreement, though executives say talks have made some progress.

The UAW also chose to walk out at some plants, rather than at all, giving its hard-charging president Shawn Fain some leverage with talks over the few days.

"Holding all-else constant (including the potential for other segments to make up lost production volume), a Wentzville strike through Sept would impact our GM Q3 estimated EBIT by roughly 2% and Q4 by about 13%," Citi analyst Itay Michaeli wrote in a .

About 3,600 UAW members work at the Wentzville, Missouri assembly plant, which makes vehicles such as the Chevrolet Colorado, GMC Canyon, and Savanna.

"For Ford, we estimate a similar monthly impact from the Michigan Assembly strike at about 15,000 units or about $140 mln EBIT (holding all-else equal)," Michaeli added. The Michigan plant makes the Ford Ranger and Bronco models.

Some analysts see Stellantis better placed to weather the strikes, saying that amongst the Big Three, "Stellantis is the most profitable one and could leverage on a lower break-even point as well as on higher inventories days than GM and Ford," according to Monica Bosio, analyst at Intesa Sanpaolo.

Since the contract talks began in mid-July, U.S.-listed shares of Stellantis have risen up about 2%, while Ford and GM shares have fallen about 17% each.

(Reporting by Abhijith Ganapavaram and additional reporting by Nathan Gomes in Bengaluru; Editing by Janane Venkatraman)

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