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UAW, Big 3 contract deadline approaches: Will strike continue?

Auto workers continue to strike against the Big Three — Ford (F), Stellantis (STLA), and General Motors (GM) — as ongoing negotiations fail to make "substantial progress." In the event an agreement is not reached by the noon deadline of Friday, September 22, strikes are expected to expand to additional manufacturing facilities.

The strike has prompted General Motors to lay off 2,000 employees at its Fairfax facility, while Stellantis is in the process of executing 368 layoffs across two of its manufacturing plants. Yahoo Finance's Rick Newman and Pras Subramanian analyze the profit margins of the Big Three and assess the impacts the United Auto Workers' (UAW) ongoing strike has had so far.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

- We are now a week into the UAW strike, and negotiations have not realized any resolution so far. Two of the Detroit three begun layoffs, as Stellantis has made a renewed offer to workers. All this, as tomorrow's noon deadline looms for the union to expand its picket lines. Here with more, Yahoo Finance's Pras Subramanian and Rick Newman Price. Let's start with you. What are you seeing?

- Hey, Josh. Yeah, that noon deadline looming tomorrow for additional strikes. If, you know, this actually happens, if it goes through, you know, we've been seeing that substantial progress is the key word that the unions are looking for. So we haven't heard much about Stellantis. Stellantis offer, you mentioned, but the UAW has acknowledged receiving it. We'll see what happens.

And meanwhile, those strikes GM and Stellantis are facing ripple effects from those ongoing stand up strikes, with GM laying off nearly 2,000 workers at its Fairfax Kansas facility because of a lack of parts. And Stellantis is looking at laying off over 350 workers across two plants due to various issues stemming from the ongoing strike at its Toledo assembly plant.

- And Rick, I know you-- specifically, you've been, kind of, watching or at least breaking down the arguments that we've been hearing from both sides on the UAW, talking about why they are, in fact, asking for this roughly 40% raise. You've been, kind of, looking at where the profits have been on the big three side. What have you found?

- Right. And this battle is ongoing. This is sort of the PR war, if you will, that's going. We had dueling op-eds in the Detroit Free Press this week. GM President Mark Royce said GM has made a good offer, and the UAW vice president came back the next day and said, oh, but GM is paying billions of dollars in stock buybacks.

And they've made record profits and so on. So I looked at profitability. It is true that the three Detroit automakers have been nicely profitable during the last several years, but they don't stand out from other automakers in any way, when you-- when you look at profit margins.

Putting Tesla aside for a second, Toyota has the best average profit margin during the last 10 years. And that's only around 7.3%. I mean, we're not even talking double digit profit margins here. This is not Apple we're talking about. Tesla has gotten into double digit profit margins.

And I think every other automaker would love to have the profits Tesla does. They just don't. The Detroit three have-- they're in the middle of the pack on profit margins during the last, you know, whether you look at it during the last single year, 2022, or you average it over the last 10 years.

So they're doing OK, but they are not doing any better than any other automaker. And meanwhile, they do have higher labor costs because they have unionized labor. And the UAW is basically saying, those labor costs should go higher still.

- Certainly points to the challenges, but, of course, worth noting again. We're up against yet another deadline. Tomorrow marks one full week of this UAW strike. Rick Newman and Pras Subramanian, as always, thanks so much for that.