Workers' rights are at a turning point as numerous strikes take place across the country. As of this week, talks between the Alliance ...
Workers'
rights are at a turning point as numerous strikes take place across the
country. As of this week, talks between the Alliance of Motion Picture and
Television Producers and the striking actors' and writers' unions appear to be
at a standstill. A United Auto Workers (UAW) strike is imminent, and in the
meanwhile, emotions are building in Motor City.
Tonight is
the deadline for the Big Three automakers and the big union's contracts to be
renewed. A strike will probably happen if the parties involved in the
negotiations can't come to an agreement before midnight. That would be
problematic for Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis
(NYSE:STLA), which would likely drive the price of car stocks even lower.
How should
investors proceed given that the U.S. auto industry's future is uncertain?
Let's get a closer look.
What's
Going On With Automotive Stocks?
Ford,
General Motors, and Stellantis, collectively referred to as the "Big
Three" of the automotive industry, have a lot on the line. As the
likelihood of a strike increases, all three of the top auto stocks are
currently experiencing difficulties. This is to be expected given how unsettled
the sector is as a result of the impending strike.
If
automakers don't agree to the UAW's demands, it will be obvious that they mean
business. According to UAW President Shawn Fain, employees at several auto
factories would strategically go on strike if a new deal isn't negotiated by
midnight. Fain believes that since it would immediately and directly affect all
three businesses, it may "turbocharge the power" of the UAW's
negotiators. NPR notes that
If the
automakers do not agree to new contracts before the current ones expire just
before midnight on Thursday, UAW union members would be instructed to strike
immediately at strategic, targeted auto plants. Additional locations would
follow at a moment's notice.
Fain's
reasoning is really sound. Even though auto stocks are already in trouble, a
contract resolution with the UAW wouldn't necessarily hurt the Big Three more.
If anything, it might turn out to be advantageous over the long and short
terms.
InvestorPlace
discovered adequate proof that worker unionization can potentially benefit
stock prices when Amazon (NASDAQ:AMZN) fought against unionization initiatives
in 2021. A thorough 2019 analysis found that unionization can also reduce the
likelihood of a stock price drop.
Additional
Motivation to Agree
Not only is
reaching a settlement with UAW a wise move, but it may also help investors. In
contrast to their colleagues in the electric vehicle (EV) sector, auto stocks
have been declining today. Today, both Tesla (NASDAQ:TSLA) and well-known EV
rivals Lucid (NASDAQ:LCID) and Rivian (NASDAQ:RIVN) are rapidly gaining.
Increased petrol costs have fueled demand for EVs as strikes continue.
Additionally,
this makes it a very bad moment for businesses with significant investments in
EV production to encounter any difficulties. The Big Three automakers fit that
description as well; they may go on a company-wide strike as soon as tomorrow.
These businesses should take the appropriate measures to prevent any more
production interruptions unless they want their trendy competitors to grab an
even greater portion of the EV market. That requires settling on a contract
before the clock strikes twelve.
Samuel
O'Brient had no stakes (direct or indirect) in any of the securities referenced
in this article as of the date of publishing. The InvestorPlace.com Publishing
Guidelines apply to the author's opinions as expressed in this post.
For more
than three years, Samuel O'Brient has covered financial markets and examined
economic policy. His specialties include green energy, NFTs, and stocks for
electric vehicle (EV) manufacturers. O'Brient delights in assisting everyone in
comprehending the intricacies of economics. According to TipRanks, he is among
the top 15% stock pickers.
The Power of Goodwill in E-Commerce:
Exploring the Potential of Podcasting:
No comments