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The UAW's New Strategy: Targeting Multiple Automaker Plants
As the labor strike led by the UAW continues to make headlines, an interesting shift in strategy has caught the attention of Wall Street. Breaking away from its traditional approach of striking at one company at a time, the UAW has chosen to simultaneously target specific plants belonging to all three major automakers.
Concerns have arisen about the potential spread of the strike to plants where the Big Three manufacture their highly profitable pickup trucks. However, the first wave of labor actions has primarily focused on factories producing midsize pickups and SUVs – also lucrative models for these automakers. This tactical move by the UAW allows them to retain leverage over negotiations, as they still have the more profitable truck plants at their disposal.
According to Dan Levy from Barclays, the next phase of strikes is likely to involve some of the large pickup plants. Levy emphasizes the significance of these vehicles, stating that they serve as the profit engines for the Big Three. Ford and GM, in particular, benefit greatly from large pickups due to the significantly higher variable profit per unit compared to their overall vehicle lineup.
Each large truck sold generates a variable profit of around $15,000 per vehicle, whereas the average profit per vehicle ranges from $9,000 to $10,000. It is worth noting that large pickup trucks and large SUVs account for a substantial portion of Ford and GM's overall profit.
The UAW's decision to target multiple automaker plants strategically amplifies their bargaining power. As negotiations continue, industry analysts and investors are closely watching the repercussions and potential outcomes of this bold move.
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