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Lazer brazing at Ford plant in Oakville, Ontario. Hourly workers at the plant have a new labor deal.
Courtesy Ford
Labor deals in the car business are possible. A deal between the United Auto Workers and the Detroit-Three auto makers might be closer than investors expect. Just look north.
Ford Motor
(ticker: F) announced Sunday that Unifor, the union representing some of its Canadian employees, has ratified a three-year labor deal agreed to by negotiators on Sept. 19. The deal includes a C$10,000 signing bonus for full-time employees and wage increases of 15% over the life of the contract.
That works out to about 4.8% a year on average. It appears there are additional cost-of-living adjustments separate from the 15% figure. The news release includes a mention of “significant inflation protection.” Ford didn’t immediately respond to a request for clarification from Barron’s, but a cost-of-living adjustment plus the base wage increase could easily put the average annual increase in the 5% to 6% range.
“Our Unifor-represented autoworkers are the heart of Ford of Canada,” Bev Goodman, Ford of Canada CEO, said in a news release. “This contract invests in our talented and dedicated employees … together, we are ensuring our Canadian operations continue to deliver with the skills, knowledge, and processes to compete and win.”
Now Ford, along with
General Motors
(GM) and
Stellantis
(STLA), needs to finish a new labor deal with the United Auto Workers union. The UAW expanded its strike against the three auto makers on Friday. Workers at GM and
Stellantis
parts and distribution facilities walked out, adding roughly 6,000 to the picket lines that already were about 13,000 strong.
UAW workers have been striking at Ford’s Detroit Manufacturing Complex, but the UAW didn’t strike at any additional Ford facilities citing progress made in negotiations.
“Ford appears to be close to a settlement and was unaffected by the latest UAW actions,” wrote Benchmark analyst Mike Ward in a report Monday.
The Unifor negotiations flew under the radar for most investors. The negotiations, on the surface, appeared less contentious. The American negotiations have included UAW President Shawn Fain literally trashing proposals from auto makers while the car companies strike back at what they have characterized as union-supplied misinformation.
The Canadian deal offers a little hope and might show that a U.S. deal isn’t all that far off. The 15% number with inflation protection is close to what auto makers are offering the U.S. workers. There is no guarantee, of course, that the UAW will settle for what a Canadian union will be getting. The UAW initially asked for wage increases of more than 40% with reduced working hours.
Nothing looks imminent. U.S. “negotiations continue,” said Ford in an emailed statement on Sunday. “Although we are making progress in some areas, we still have significant gaps to close on the key economic issues. In the end, the issues are interconnected and must work within an overall agreement that supports our mutual success.”
The UAW has been on strike for about 10 days. The UAW struck GM in 2019 for 40 days.
Ford stock was down 0.3%, while the
S&P 500
and
Dow Jones Industrial Average
were down 0.1% and 0.2%, respectively. GM stock was off 0.6% and Stellantis shares fell 1.8%.
Coming into Monday trading, Ford and GM shares have declined about 17% and 15%, respectively, since the start of July, when labor rhetoric started heating up. The S&P 500 has fallen about 3% over the same span.
Stellantis stock has gained about 10%. Stellantis is a more global company than either GM or Ford. It’s also a cheaper stock. Stellantis stock trades for less than 4 times estimated 2024 earnings. Ford stock trades for less than 7 times. GM trades for less than 5.
Write to Al Root at [email protected]