The labor negotiations this year between the United Auto Workers and the Detroit Three auto makers are oh-so-close to being wrapped up. Investors are all but assured that no more nasty surprises await.
The UAW late Thursday announced that Union Local 900 voted overwhelmingly in favor of the deal with 82% casting a ballot to accept the new labor deal of four-plus years.
Local 900 represents workers at
Ford Motor
‘s (ticker: F) Michigan Assembly Plant. The local union was the first local to walk off the job at Ford back on Sept. 15. The UAW struck all three auto makers at once with workers leaving one facility each at Ford,
General Motors
(GM), and Chrysler parent
Stellantis
(STLA).
Ford was the first auto maker to reach a tentative agreement with the UAW, so Ford’s UAW workers should be the first to wrap up voting on the new deal.
Positive early voting outcomes should give investors some confidence that the new deal will be ratified. If it is, the contract will run through April 2028 and include general wage increases of about 25% over the life of the contract including other adjustments for inflation. Workers get an immediate 11% bump in pay upon ratification.
That’s an average. The UAW also said that the lowest-paid Ford workers stand to get a 150% raise over the life of the contract and some workers will see an 85% bump immediately after ratification. There are a variety of factors that influence gains like that. The new deal, for instance, lowers the time needed to reach higher wage rates, and it also eliminates wage scales that put more recent hires on a different pay progression with lower maximums.
It takes a couple of weeks to go from a tentative agreement to a finalized deal. The UAW
Stellantis
National Council met in Detroit on Thursday, according to the Union. The UAW GM Council is slated to meet on Friday. Council meetings are a step the UAW takes before sending the deals to members for a vote.
Each company has its own labor contract and membership vote even though the contracts are very similar and union workers get similar pay and benefits.
Ford stock has fallen about 32% since the beginning of July when labor issues started to weigh on investor sentiment. The
S&P 500
has declined about 3% over the same span.
Ford stock has fallen about 12% since the tentative agreement was reached. The contract didn’t do that. Instead, Ford shares dropped more than 12% after the auto maker reporting disappointing third-quarter earnings on Oct 26.
Labor is only one factor impacting Ford’s stock. The economy matters even more.
Write to Al Root at allen.root@dowjones.com
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