Morgan Stanley says investor concerns about a UAW strike as Detroit’s “Big 3” automakers approach the expiry of the current contract this September 14 are “well founded,” but for the Detroit 3 OEMs, “it’s important to put labor costs into perspective,” adds the firm, which estimates UAW-represented labor costs account for around 4% of the global revenues of the Detroit 3. The firm would be a buyer of both Ford (F) and General Motors (GM) right now and during the negotiations as it believes even a “difficult” outcome can catalyze far bigger changes to strategy and capital discipline, which will “eventually yield significant and longer lasting benefits to shareholders that will exceed today’s labor headlines,” the analyst says. Morgan Stanley has Overweight ratings on Ford and GM shares.
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