A tough situation has just gotten tougher, it seems. Not only is the United Auto Workers (UAW) strike not likely to end anytime soon, but it’s actually expanding. Regardless of whether you specifically own automotive stocks or not, the UAW strike can still have a deep impact on your portfolio and on the nation’s economy.
Among the most directly affected automakers are Stellantis (NYSE:STLA) and General Motors (NYSE:GM), both of which manufacture cars in Detroit. If the automotive industry is the backbone of the U.S. economy, then the expanding UAW strike is a very far-reaching development.
What’s the Cost of the UAW Strike?
Here’s the scoop. First, the UAW strikes now include a 6,800-member walkout at a factory where Ram pickup trucks are manufactured for Stellantis. This walkout caused a shutdown of the Sterling Heights, Michigan, factory, which is an important profit center for Stellantis.
Meanwhile, the UAW strike has also expanded to a full-size General Motors SUV plant in Arlington, Texas. That particular extension of the strike involves around 5,000 workers.
The General Motors plant strike expansion occurred just hours after the company reported its third-quarter earnings results. Those results exceeded Wall Street’s expectations, but GM stock sank in midday trading.
That’s probably because General Motors reported the cost of the UAW strike. Specifically, the automaker claimed that the strikes had cost General Motors $800 million in lost production (before the Arlington disruption), including $200 million during 2023’s third quarter.
General Motors even went so far as to withdraw its full-year 2023 financial guidance. The company seems to suggest that the actions of the UAW are to blame for this.
What Does This Mean for Investors?
If you own automotive stocks such as STLA stock or GM stock, be prepared for ongoing volatility. There may be more twists and turns, both bullish and bearish, as the UAW expands its activity in Detroit.
More broadly, investors and car shoppers should keep tabs on the latest developments with the UAW strike. There could be a resolution before the year is over, but if not, both the economy and financial markets could take a hit.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
