The 40-day GM strike cost the automaker nearly $3 billion - and BAML says Fiat Chrysler is most at risk of a future walkout

Fiat ChryslerA Fiat Chrysler assembly worker works on the interior of a partially assembled minivan at the Windsor Assembly Plant in Windsor, Ontario, February 9, 2015.Reuters

  • The United Auto Workers union is using its improved contract with General Motors to boost conditions with other automakers, and Bank of America Merrill Lynch analysts said Fiat Chrysler faces the greatest risk of a prolonged strike.
  • Of FCA's UAW workforce, 59% are in-progression employees and 13% are temporary workers. Both groups of employees gained several contract improvements following a 40-day strike with GM.
  • A strike with FCA would "materially increase costs" and could "shrink" the automaker's labor advantage over Ford and GM, the analysts wrote.
  • Watch FCA trade live here.

The United Auto Workers union is using its improved contract with General Motors to boost conditions at other automakers, and Fiat Chrysler Automobiles faces the greatest risk of a prolonged strike, Bank of America Merrill Lynch analysts wrote Friday.

The 40-day strike between UAW and GM cost the company nearly $3 billion and even weighed on US factory output through October. Union members began negotiations with Ford after ratifying a new contract with GM.

Though approval from Ford leadership may be "a bit more challenging than initially assumed," BAML sees "little risk" of a Ford-UAW strike.

Instead, FCA's large proportion of non-full-time workers lends the company "the more significant risk of a strike," the team of analysts wrote. Of FCA's UAW workforce, 59% are in-progression employees who were hired after 2007 and earn less than legacy employees, according to BAML. Temporary workers make up 13% of FCA's UAW workforce.

Temporary employees received significant improvements through negotiations with GM, and the same population serving FCA is likely to seek those gains when they approach the automaker's leadership. Contract improvements for both groups of workers would "materially increase cost," threaten operating margins and "could significantly shrink FCA's labor advantage over its rivals Ford and GM," the analysts wrote.

Such a demonstration would also yield adverse effects all the way down FCA's supply chain, according to BAML. The firms most exposed to FCA's performance include mobility tech company Magna, American Axle, and supply firm Dana. The aforementioned companies operate under fixed-cost structures, and would "theoretically be most at risk in an FCA strike/production stoppage scenario," BAML noted.

FCA traded at $16.05 per share at 1:20 p.m. ET Friday, up roughly 11% year-to-date.

The automaker has 11 "buy" ratings, nine "hold" ratings, and two "sell" ratings from analysts, with a consensus price target of $18.18, according to Bloomberg data.

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