Why Robot? Automation To Increase After UAW Deal Costs The Car Industry
Portfolio Pulse from Neil Dennis
U.S. automakers are expected to increase investment in automation following wage increases agreed with the United Auto Workers (UAW) union. Ford (NYSE:F), General Motors (NYSE:GM), and Stellantis (NYSE:STLA) face higher labor costs after a 25% wage hike. Ford anticipates $1.7 billion in lost profits for 2023 and $8.8 billion over four years due to the labor deal. The shift towards automation could negatively impact UAW workers in the long term. Companies like Rockwell Automation (NYSE:ROK) and Magna International (NYSE:MGA) could benefit as automakers deepen their automation investments.
January 15, 2024 | 7:48 pm
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NEGATIVE IMPACT
Ford anticipates a $1.7 billion loss in profits for 2023 and $8.8 billion over four years due to the UAW labor deal, and is considering automation to offset costs.
The significant increase in labor costs due to the UAW deal is likely to negatively impact Ford's short-term profitability, as indicated by the expected loss in profits. The company's exploration of automation as a cost-saving measure could also signal a shift in operational strategy.
CONFIDENCE 85
IMPORTANCE 80
RELEVANCE 90
NEGATIVE IMPACT
General Motors is likely to face increased labor costs after agreeing to a 25% wage increase with the UAW, which may lead to a greater focus on automation.
The wage increase agreed upon with the UAW is expected to raise labor costs for GM, which could negatively affect short-term profitability and possibly lead to an increased investment in automation to reduce costs.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 70
NEGATIVE IMPACT
Stellantis may also see higher labor costs due to the UAW wage increases, potentially accelerating the company's investment in automation.
Like its counterparts, Stellantis is facing increased labor costs from the recent UAW agreements, which could impact its short-term financials and drive the company towards more automation to maintain profitability.
CONFIDENCE 80
IMPORTANCE 70
RELEVANCE 70
POSITIVE IMPACT
Magna International, known for automating the manufacture of components, may see increased business as the auto industry invests more in automation.
Magna International's expertise in automating component manufacturing positions it to benefit from the auto industry's shift towards automation, driven by the need to control labor expenses.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 60
POSITIVE IMPACT
Rockwell Automation could benefit as automakers like Ford, GM, and Stellantis look to automation to mitigate rising labor costs.
As a developer of robots for automating the EV industry, Rockwell Automation stands to gain from the increased focus on automation by major automakers, which are looking to reduce labor costs.
CONFIDENCE 80
IMPORTANCE 75
RELEVANCE 60