Perfect Storm Brewing: Detroit 3 Labour Talks with UAW
DBRS Morningstar published a commentary titled “Perfect Storm Brewing: Detroit 3 Labour Talks with UAW.”Key highlights include:
-- The current round of discussions between the Detroit 3 and the UAW could prove contentious for several reasons, including material macroeconomic headwinds, high inflation, rising interest rates, and cost of living.
-- The industry’s transition to electric vehicles, wages, and job security will be key negotiating points.
-- New leadership for auto manufacturers and UAW will make negotiations harder.
-- Despite the risk of auto strikes and potentially sizable associated costs, ratings should remain unaffected.
“The confluence of these factors suggests a perfect storm brewing around the current negotiations, with the outcomes (possibly including a strike against one and conceivably all of the companies involved) potentially resulting in significant financial costs for these auto manufacturers,” said Robert Streda, Senior Vice President, Diversified Industries. “Despite this, we do not anticipate taking any negative rating actions on any of the Detroit 3 stemming from the current negotiations, primarily due to their particularly strong financial postures.”
Ford Motor designs, manufactures, markets, and services a line of Ford cars, trucks, sport utility vehicles, electrified vehicles, and Lincoln vehicles, as well as provides financial services through its subsidiary, Ford Motor Credit Company LLC. The company is engaged in electrification; mobility solutions, including self-driving services; and connected vehicle services. The company has three operating segments: Automotive, which includes the sale of Ford and Lincoln vehicles, service parts, and accessories; Mobility, which includes its autonomous vehicles and its investment in mobility through Ford Smart Mobility LLC; and Ford Credit, which includes vehicle-related financing and leasing activities.
General Motors designs, builds and sells trucks, crossovers, cars and automobile parts. The company also provides automotive financing services through its subsidiary, General Motors Financial Company, Inc. (GM Financial). GM Financial provides retail loan and lease lending across the credit spectrum. GM Financial provides commercial lending products to dealers including new and used vehicle inventory floorplan financing and dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, and to purchase and/or finance dealership real estate. Other commercial lending products include financing for parts and accessories, dealer fleets and storage centers.
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