Ford Motor,
along with
General Motors
and
Stellantis,
are locked in contentious labor negotiations with the United Auto Workers union.
Investors aren’t sure when a new labor deal will be reached or what one will mean for investors. The chance of a deal soon looks low with UAW President Shawn Fain threatening to broaden a strike if negotiating progress isn’t made by Friday.
It all sounds very bleak. Some labor progress was made though. Not in the U.S., but in Canada. It’s a small sign that auto makers and auto workers can agree.
Tuesday evening, Ford (ticker: F) announced it had reached a tentative labor deal with the Unifor union, which represents about 5,000 workers in Canada.
The Canadian Auto Workers, or CAW, union merged with other labor groups to form Unifor in 2023. The CAW was part of the UAW at one time before breaking away in 1985. Disagreements over worker concessions to the auto makers designed to fight foreign competition as well as where cars should be assembled in North America essentially led to the fracture.
While an agreement is good news, the are no details about the contract available. “The agreement is subject to ratification by Ford-Unifor members,” said Steven Majer, vice president of human resources, Ford of Canada in a news release. “To respect the ratification process, Ford of Canada will not discuss the specifics of the tentative agreement.”
Ford referred Barron’s to the news release when asked for additional details.
Investors would really like to know what level of wage increases Unifor is going to get over the life of the contract. The UAW leadership has rejected wage increases of about 20% plus cost-of-living adjustments. They are looking for between 30% and 40% increases over the life of the contract.
Essentially, the union is asking for wage increases in the range of 8% a year on average. The companies are offering about 6%. Workers at
United Parcel Service
(UPS) are going to see wage increases in the range of 5%. Those increases will increase costs at UPS by about 4% a year. There are some productivity offsets to higher wages.
Ford stock was unchanged in after-hours trading Tuesday. Shares are down about 16% since the start of July when labor talks heated up. The
S&P 500
is flat over the same span.
Ford stock will likely make up some of that underperformance when a UAW deal is reached, provided wage increases are in the range of what investors expect.
Write to Al Root at [email protected]
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