Whenever you get a strike in an industry with a lot of competition, money flows more easily to the companies that investors see coming out ahead.
That looks like what happened this past week as investors, customers and workers awaited a United Auto Workers strike against the big American automakers.
Workers walked off their jobs late Thursday at three plants owned by Ford, (F) -) General Motors, (GM) -) and Chrysler/Jeep parent Stellantis (STLA) -).
Maybe surprisingly, Ford, GM and Stellantis shares finished higher on the week. Ford was up 2.5%, with GM up 3% and Stellantis up 5.6%.
But their competitors' shares did mostly better — possibly a bet on whom investors think will win — or want to win.
Volkswagen (VWAGY) -) ended 2.1% higher, followed by Rivian Automotive, (RIVN) -) up 4.7%; Honda, (HMC) -) up 5.3%; Toyota, (TM) -) up 6.8%; Nissan, (NSANY) -) up 7.7%; and Tesla, (TSLA) -) up 10.42%.
Volkswagen's gain was small because of disappointing quarterly results in the face of more competition from Chinese automakers, especially in electric vehicles.
So far this year, Ford shares are up 8.4%, with GM shares up just 0.9%, not including a small dividend.
Stellantis shares are up 35.6%. The company is different from Ford and GM. It was created out of a 2021 merger of Fiat Chrysler with the French PSA Group. Brands include Chrysler, Jeep, Fiat, Peugeot, Alfa Romeo and Ram.
Volkswagen shares, meanwhile, are down 10.4% for the year. Rivian is up 31.2%. Toyota has climbed 38.5%, with Nissan up 45.5% and Honda up 54.6%.
Tesla, the darling of tech-loving investors and fans of CEO Elon Musk, is up a whopping 122.8%.
Critics: A big UAW contract is too risky
Those betting against the Big Three will argue that the UAW demands, if met, will cripple the automakers.
The demands include a 4-day work week, a 40% wage increase over the four-year contract term and ending rules and provisions put in place during the 2008-2009 financial crisis.
GM and Chrysler were forced into Chapter 11 bankruptcy protection during the crisis; Ford barely avoided it.
The assumption is that a win for the UAW will make the American giants difficult to manage and will struggle to compete against their lowest-cost and mostly non-union competitors, especially Tesla.
Chinese competition is of special concern, especially for GM, which is scrambling to develop a more robust lineup of electric vehicles.
UAW: With your recovery, time to pay up
The UAW disputes a big new contract poses an existential threat to the automakers.
Plus, the union argues they have not participated in the industry's recovery from the financial crisis.
Rigid compensation and work rules put in place about 14 years ago are still in place, but the companies and upper managements have been rewarded handsomely.
As the weekend ended, there were talks between union and companies but no real signs of progress. What's not known is if the UAW will expand the walkout.
According to a Reuters report Sunday, Evercore ISI analyst Chris McNally said he expects plants that build more profitable pickup trucks like Ford's F-150, GM's Chevrolet Silverado and Stellantis' Ram to be the next strike targets if the walkout continues.
