par Shivansh Tiwary et Raechel Thankam Job
Businesses from airlines to auto parts makers are beginning to feel the effects of the month-long strike by hourly workers at three Detroit automakers, with analysts warning that the financial consequences could worsen if the walkout doesn’t take hold. not end quickly.
As the United Auto Workers (UAW) strike enters its 36th day and the total economic cost is estimated at more than $7 billion, businesses are calculating the cost of lost revenue amid economic uncertainty and persistent inflation.
“The damage caused by the strikes will last long after UAW members return to work,” said Erik Gordon, a professor at the University of Michigan.
Workers will also be careful how they spend their money because strike pay is lower than normal wages, he added.
U.S. carrier Delta Air Lines DAL.N earlier this month became one of the first major companies to report a loss after saying the strike had reduced a “significant” amount of business in Detroit.
Paint and coatings manufacturer PPG Industries
PPG.N said earlier this week that it had included a profit impact of “a few cents” per share in its fourth-quarter forecast, while railroad worker Union Pacific UNP.N said the strike would not had had little impact so far.
Analysts said trucking companies and suppliers that make parts for General Motors
GM.N , Ford Motor FN and Stellantis STLAM.MI are among the most exposed to the strike, which has seen more than 34,000 workers walk out of their daily jobs.
“Trucking companies deliver a lot of the components that go into cars. They and their workers will suffer,” Gordon said.
Large spare parts suppliers such as Aptiv
With APTV.N , Magna International MG.TO , Lear LEA.N and American Axle AXL.N expected to report results in the coming weeks, investors will be paying attention to the scale of the financial loss the companies could suffer.
“Suppliers are expected to feel the effects of lower volumes in the fourth quarter, but the pain will not be evenly distributed,” said John Murphy, an analyst at BofA Global Research.
Lear and Magna have double-digit sales exposure to all three automakers, while Aptiv has exposure between 8% and 9%, according to their latest annual reports.
Earlier this week, consulting firm Anderson Economic Group estimated economic losses from supplier wages and revenues at about $2.67 billion through the fourth week of the strike.
On Friday, French auto parts manufacturer Forvia
FRVIA.PA warned of the possibility of temporary layoffs after estimating that the strike would have a greater impact on sales in October.
The chief executive of Sweden’s Autoliv ALV.N, the world’s largest producer of airbags and seat belts, told Reuters he had seen very limited impact from the strike, but that it could become a risk if it continues.
“When we have these kinds of disruptions … in global flows, it’s not good,” said Mikael Bratt, the company’s chief executive.
The UAW led an unusual campaign of simultaneous strikes against the three Detroit automakers, demanding a 40 percent wage increase, including an immediate 20 percent increase, benefits improvements, and coverage for factory workers. of electric vehicle batteries within the framework of union agreements.
So far, no agreement has been reached and shares of manufacturers and suppliers have fallen since the strike began on September 15.
2023-10-20 14:01:33
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