UAW is ‘playing with fire’ – says Jim Cramer

United Auto Workers is “playing with fire” going up against Ford Motor Co (NYSE: F), says Jim Cramer.

Cramer’s take on the UAW strike

Ford is offering about a 20% pay raise to its workers on strike. But the UAW continues to insist on a 36% increase instead – on top of its other demands including cost-of-living adjustments and that pensions be restored.

The automaker has already warned that submitting to such demands could lead to bankruptcy. Jim Cramer, therefore, sees a real risk of it moving to lock workers out if an agreement is not reached.

Ford did lay off (temporarily) hundreds of workers last week at its under-strike facility in Michigan. The automaker has more UAW members than peers (General Motors and Stellantis) that are also facing the said protest.  

Its shares are now down about 20% versus their year-to-date high.

What other risks are involved?

But that’s not all. Cramer did tell members of his investing club today that increased pressure and unquenchable demands of the union may even make Ford Motor consider moving some of its U.S. operations to Mexico.

He’s also convinced that the legacy car manufacturer can outlast the United Auto Workers which is limited in terms of its financial ability to pay the workers on strike.

Note that President Biden recently sided with the UAW saying the automakers should share record profits with their workers – but he can’t risk them taking certain operations to Mexico either especially now when elections are just around the corner, added Jim Cramer.  

In July, Ford Motor reported a 2.8% decline in its EV sales in the second quarter as Invezz reported here.

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