Automaker Ford (NYSE:F) is in big trouble, as the United Auto Workers (UAW) union expanded its strike to the company’s pick-up truck plant in Kentucky. About 8,700 workers at Ford’s largest plant went on strike on Wednesday evening, with the UAW accusing the company of refusing to make further progress in contract negotiations. The UAW’s latest move could significantly impact Ford’s revenue and earnings. Ford shares were down 1.8% in Wednesday’s extended trading session.
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Ford-UAW Dispute Worsens
Ford’s Kentucky truck plant is not only the company’s largest factory but also one of the largest auto plants in the world. The Kentucky plant, which produces Ford Super Duty pickup trucks and the Lincoln Navigator and Ford Expedition large SUVs, generates $25 billion in revenue annually and is a highly profitable operation.
The company expects the work stoppage at this plant to have “painful aftershocks,” as it would impact a dozen additional Ford operations and suppliers’ businesses.
Calling the UAW’s decision to strike at the Kentucky plant “grossly irresponsible,” Ford slammed the union leadership’s strategy of keeping the three major Detroit automakers “wounded” for months and for creating chaos in the industry. The UAW union commenced its strike on September 15 after negotiations with Ford, General Motors (NYSE:GM), and Stellantis (NYSE:STLA) failed to meet its multiple demands, including higher wages, retirement benefits, and progress of temporary workers to permanent roles.
Ford claimed that it has been bargaining in good faith on the joint venture battery plants issue. UAW is demanding union representation at future battery plants to protect jobs. Last week, Ford increased its proposed salary hike to 23% but failed to impress UAW. Ford is already facing strikes at an assembly plant near Detroit and its Chicago factory.
Ford, General Motors, and Stellantis have temporarily laid off several workers due to the ongoing UAW strike. The strike is now impacting additional auto players. On Monday, UAW workers went on strike at Volvo Group’s (OTCMKTS:VLVLY) Mack Trucks plants in Pennsylvania, Maryland, and Florida after voting against a proposed five-year contract.
Is Ford a Good Stock to Buy?
Wall Street is cautiously optimistic on Ford stock amid the ongoing strike and macro uncertainty. With seven Buys, seven Holds, and one Sell, Ford scores a Moderate Buy consensus rating. The average price target of $15.27 implies 24.7% upside. Shares have risen over 5% year-to-date.
