General Motors shares have historically recouped strike-induced losses after a labor agreement is reached, but this time might be different as the stakes are much higher for the automaker, according to Barclays. GM, led by CEO Mary Barra, tends to be the U.S. automaker most affected by strikes, historically speaking. During past work stoppages, GM has experienced 94% of total lost worker days among the Big Three U.S. auto manufacturers, Barclays said. The trading pattern for GM shares during walkouts has been somewhat predictable. The stock typically underperforms during contract renewal years before a deal is reached and recovers the loss after a resolution, creating a buying opportunity, Barclays said. GM has so far followed this trend, with shares barely changed on the year, compared with a 15% gain for the S & P 500 . GM YTD mountain General Motors However, this year’s strike by the United Auto Workers could turn out to be a costly and protracted showdown for GM, which may result in continuous underperformance for the stock, Barclays said. “For the current UAW negotiations, we believe the ultimate agreement that is struck will be more critical in dictating post-resolution performance than is typical,” Barclays auto analyst Dan Levy said. Key proposals from the union have included 40% hourly pay increases, a reduced 32-hour workweek, a shift back to traditional pensions, the elimination of compensation tiers and a restoration of cost-of-living adjustments (COLA), among other items on the table, including enhanced retiree, vacation and family leave benefits. Levy said the ultimate deal could end up creating between $2 billion and $3 billion in additional annual costs for GM. “Wage increases and other costs (i.e. bonuses, COLAs, pensions, etc.) in the eventual agreement that create an amount in excess of this would likely negatively impact post-strike stock performance,” Levy said.
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