Labor deals are possible in the car business. 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 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 Unifor must hammer out a deal with the two other auto makers. The organization announced Monday afternoon that
General Motors
(GM) would be its next target.
“GM Canada welcomes resuming contract negotiations with Unifor to reach a tentative agreement for team members at Oshawa Operations, St. Catharines Propulsion Plant and Woodstock Parts Distribution Centre,” a GM spokesperson said.
Unifor is taking a traditional approach to these negotiations by picking one auto maker at a time and then using each agreement as a way to bargain with the others.
The United Auto Workers in the U.S., on the other hand, are employing a different strategy by striking all three auto makers at once. But if talks in Canada are any indication, a deal between the UAW and the Detroit-Three auto makers might be closer than investors expect.
Ford, GM, and Chrysler-parent
Stellantis
(STLA), still needs to finish a new labor deal with the UAW. 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 and, 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% increase negotiated over the life of the contract is close to what auto makers are offering U.S. workers. There is no guarantee, of course, that the UAW will settle for the same increases the Canadian union bargained for. The UAW initially asked for wage increases of around 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 early Monday and is now up 1.1% at $12.57 a share, while the
S&P 500
is up 0.1% and the
Dow Jones Industrial Average
is down 0.1%. GM stock is up 1.3% and Stellantis shares are down 1.1%.
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 more of a 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]
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