Ford, General Motors face strike risk as UAW rejects Big 3 pay offers

Ford Motor  (F) - Get Free Report and General Motors  (GM) - Get Free Report shares edged higher in pre-market trading after the United Autoworkers Union rejected pay deals from all of the so-called 'Big Three' U.S. carmakers and warned of strike action as early as next week if a deal isn't reached.

UAW president Shawn Fain described the highest of the three pay offers — a 14.5% increase spread over four years from Chrysler owner Stellantis  (STLA) - Get Free Report — as "deeply inadequate" and vowed to bring cost-of-living adjustments, tied to inflation, back to the bargaining table as a result. Automakers are offering inflation-protection payments valued between $10,500 and $12,000 over the next four years, but have rejected the noting of cost-of-living adjustments on an ongoing basis.

Last week, Ford offered a 9% pay increase, with General Motors offering 10%. The UAW has set out targets including a 46% increase in wages, cost-of-living adjustments, defined benefit pension plans for new hires and the end of tiered wage structures.

Last month, The UAW said its members who work at GM, Ford and Stellantis voted 97% in favor of strike action amid what Fain called "slow going" talks with company management that began in early July.

The current contract, which was reached in 2019, expires at one minute to midnight on Thursday September 21.

Ford shares were marked 0.4% higher in pre-market trading to indicate an opening bell price of $12.35 each. General Motors, meanwhile, was marked 0.3% higher at $33.05 each.

Anderson Economic Group, a Lansing, Michigan-based consultancy, published a weekend report suggesting even a 10-day strike could cost the U.S. economy around $5.6 billion and tip the economy of the state of Michigan itself into recession.

“If we were to have a long strike in 2023, the state of Michigan and parts of the Midwest would go into a recession,” said CEO Patrick Anderson. “When GM workers went on strike in 2019, you saw gross state product drop in Michigan in the fourth quarter, while in the rest of the country it was largely unaffected."

"That won’t be the case this time if the UAW goes through on its threat to strike all three companies.” he added.

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