UAW Workers Strike at Dauch Corp. in Michigan for Better Wages
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Source: CNBC
- Strike Scale: Nearly 1,000 workers at Dauch Corp.'s Michigan plant have gone on strike due to failed contract negotiations, highlighting significant worker dissatisfaction regarding wages and benefits.
- Wage History: Workers' wages were slashed to $14.50 per hour during the 2008 recession from a peak of $29, with current maximum wages at $22, indicating a pressing need for wage restoration to meet living standards.
- Negotiation Stance: Dauch Corp. expressed disappointment over the strike and emphasized a desire to reach a fair agreement through negotiations; however, union leaders assert they will continue striking until the company responds appropriately, reflecting a tense negotiation atmosphere.
- Production Impact: The strike affects parts production for several GM models, and while GM claims operations are normal, the union believes the automaker's axle inventory can only sustain production for about two weeks, potentially leading to future production pressures.
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Analyst Views on DCH
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About DCH
Dauch Corporation, formerly American Axle & Manufacturing Holdings, Inc., is a global Tier 1 automotive supplier. The Company designs, engineers and manufactures driveline and metal forming technologies to support electric, hybrid and internal combustion vehicles. The Company's product categories include Driveline and Metal Forming. Its Driveline products consist primarily of front and rear axles, driveshafts, differential assemblies, clutch modules, balance shaft systems, disconnecting driveline technology, and electric and hybrid driveline products and systems for light trucks, sport utility vehicles (SUVs), crossover vehicles, passenger cars and commercial vehicles. The Company's Metal Forming products consist primarily of engine, transmission, driveline and safety-critical components for traditional internal combustion engine and electric vehicle architectures including light vehicles, commercial vehicles and off-highway vehicles, as well as products for industrial markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- Negotiation Stalemate: Since the union initiated a strike against GM supplier Dauch Corp on Sunday, negotiations have not resumed, indicating unresolved differences over wages and benefits as the union chairman noted the company has not reached out to continue discussions.
- Worker Protests: Dozens of Dauch employees have been picketing outside the Three Rivers, Michigan plant since Monday, which primarily produces axles for GM's profitable pickup trucks, and this protest could potentially disrupt production schedules.
- Supply Chain Pressure: The union chairman revealed that GM currently has only about two weeks' worth of axle supply to maintain production, and if negotiations do not reach a swift resolution, it could lead to production halts, impacting the company's overall operations and profitability.
- Wage Demands: The union is pushing for an increase in top wages from the current $22 per hour to over $30, and despite a $4 wage increase since 2008, workers are seeking better treatment regarding work-life balance and healthcare benefits.
See More
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- Valuation Grade Overview: Dauch Corporation and Goodyear Tire & Rubber are highlighted as the cheapest stocks in the U.S. consumer discretionary sector, both receiving an A+ valuation grade, indicating their relative attractiveness.
- Valuation Metrics Analysis: The valuation grade is derived from a comprehensive assessment of multiple metrics, including P/E, PEG, price to sales, and cash flow, reflecting the pricing advantages of these stocks under current and forward estimates.
- Small-Cap Performance: Other small-cap consumer stocks like Kohl's, Newell Brands, and Camping World Holdings also received A+ valuation grades, showcasing their competitiveness and investment appeal in the market.
- Market Trend Impact: As investor interest in small-cap stocks grows, these high-rated stocks may attract more investment, potentially driving up their prices and improving overall market sentiment.
See More
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- Consumer Stock Weakness: Consumer stocks were broadly lower on Monday afternoon, reflecting market concerns about the economic outlook, particularly amid rising inflation and interest rates, which negatively impacted investor sentiment.
- Market Sentiment Decline: As uncertainty around future consumer spending increases, the poor performance of the consumer goods sector may lead to downward revisions in earnings expectations for related companies, consequently affecting stock prices.
- Industry Impact Analysis: The weakness in the consumer goods sector could have a negative effect on overall market sentiment, especially in a slowing economy, potentially prompting more investors to shift towards defensive assets to mitigate risk.
- Investor Strategy Adjustment: In light of the decline in consumer stocks, investors may reassess their portfolios and consider reallocating funds to sectors with greater growth potential to navigate the uncertainties brought about by market volatility.
See More
Michigan Plant Workers Strike Impacts GM Production
- Strike Action: The United Auto Workers (UAW) announced that workers at Dauch Corp's plant in Three Rivers, Michigan, began striking on Monday, potentially impacting the production of GM's best-selling trucks, particularly the Silverado and Sierra.
- Inventory Status: According to sources, GM currently has about two weeks' worth of axle inventory on hand, which may sustain production in the short term, but prolonged strikes could severely disrupt operations.
- Market Reaction: Following the strike announcement, GM's stock fell approximately 2% in afternoon trading on Monday, while Dauch's shares dropped around 6%, indicating market concerns over potential production halts.
- Wage Dispute: The UAW is pushing for wage increases, highlighting that workers made sacrifices in 2008 to keep the plant operational, with current top wages at $22 per hour, significantly lower than the $29 per hour in 2008, underscoring the urgent need for wage restoration.
See More
