The United Auto Workers reached a labor agreement with
Volvo Group’s
Mack Trucks late Sunday, avoiding a potential strike.
The union said in a tweet that nearly 4,000 of the truck maker’s workers in Pennsylvania, Maryland and Florida, struck a tentative deal just before the deadline of midnight Eastern Time Sunday.
The deal could be seen as both good and bad news for
Ford
(ticker: F),
General Motors
(
GM
), and
Stellantis
(STLA) as the strikes at the three Detroit auto makers enter a third full week.
While the details of the deal are yet to be released, it does show that it is possible to reach an agreement—and quickly—if need be. The union said Thursday that it and Mack Trucks were still “far apart on the economics,” and yet an agreement was reached just days later.
The deal, which will replace a four-year contract, has to be ratified by members, a process that should only take a few days. More details about the agreement should be available when the membership has signed off. The UAW and Mack didn’t immediately respond to requests for comment about terms.
The level of wage increases will be closely watched, but investors should remember that labor agreements, and past contracts, differ between truck manufacturing and the Detroit Big Three automakers, so whatever deals Ford,
Stellantis
and GM reach may well be different from the new UAW-Mack deal.
Auto worker’s wages, excluding profit sharing, have been rising at about 1% a year on average for the past 14 years. UAW members took a hit to benefits as a result of the 2008-2009 financial crisis, which pushed GM into Chapter 11 bankruptcy.
The 2019 Mack contract included wage increases of 6% over the life of the contract, or between 1% and 2% a year on average, reflecting that inflation was lower then. Inflation has averaged closer to 4% a year over the past four years.
Another UAW walkout would have diverted funds away from the union’s strike fund. The last-minute deal, therefore, ensures more funds are available for the Ford, GM, and
Stellantis
strikes.
When the walkouts began Sept.15, the union had an approximately $825 million strike fund, and planned to pay striking workers about $500 a week. The targeted approach taken by the union so far means the fund could last longer than it otherwise would.
The UAW expanded its strike against GM and Ford Friday, targeting one assembly plant at each company. Chrysler parent Stellantis was spared this time, but Ford, which avoided the previous week’s escalation, was included. That suggests the union is no longer satisfied with how negotiations are progressing with Ford.
Ford, GM, and Stellantis all edged higher ahead of the open of trading Monday.
S&P 500
and
Dow Jones Industrial Average
futures were both down 0.2%.
Write to Callum Keown at [email protected]
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