Canadian Strikes & European Downturn Could Hurt Ford, GM

Over the course of what has been a summer of up's and down's, Ford F, General Motors GM and Chrysler have been able to stand strong and pull out decent quarters. However, the automakers may have bigger fish to fry in the autumn months, as strike preparations are underway in Canada, threatening to stop production on more than a dozen popular models. According to The Detroit News, a lengthy strike by the Canadian Auto Workers (CAW) union could, "ripple and hinder production by Detroit's Big Three in the U.S. The last CAW strike against GM in 1996 lasted three weeks." Vehicles that could eventually be impacted by such a strike include Chrysler's Town & Country van, General Motors' Terrain SUV and even the highly popularized Ford Edge. The CAW is set to begin striking sometime after 11:59 p.m. on Monday if a contract agreement is not reached between the union and the Detroit automakers by then. With such a risk at stake, the Big Three have stayed mute on production plans, should a strike occur. "Ford, GM and Chrysler have remained silent on contingency plans should more than 18,000 CAW members strike; all three have options should a strike drag out, although those options are limited," The Detroit News reported early Thursday morning. And Canada is not the only foreign country that could cost the motor companies a pretty penny. Europe, which has been struggling financially for quite some time, has become a problem child in Ford's multi-cultural family. In fact, Ford may be closing a factory in Belgium to address near-term challenges. However, the company has already begun crafting plans to fix what could be another recession disaster. Ford introduced 15 new models overseas last week in order to increase consumer demand. The restyled vehicles will make their debut over the course of the next five years, with the company noting that they are investing in the future, despite the current economic crisis. "Ford mgmt downplayed the likelihood of a European downturn as deep as the U.S.'s during the financial crisis," analysts at Jefferies said following a meeting with Ford executives. "There does seem to be at least some variable capacity that Ford can take out. We got the sense that Ford is targeting a restructuring plan that will result in break-even operations at current industry production volumes." With revamped models and plant closings on Ford's list of things to do in Europe, it appears that the restructuring plan is well underway. While things slowly get under control in one foreign country, Ford and its competitors will have to explore other options to combat what might be an ugly fight in neighboring Canada, if the strike occurs. Ford is up .20 percent at $10.23 in pre-market trading, while General Motors is up .13 percent at $23.16.