United Auto Workers Update

President Shawn Fain to Address Members

United Auto Workers (UAW) President Shawn Fain is scheduled to speak on Sunday evening at 7 p.m. Eastern time. The talk, aimed at members working at Ford Motor, will provide an update on the tentative agreement reached between the car company and the union on Oct. 25.

Tentative Agreement Highlights

The proposed deal, which will extend until April 2028 if ratified, includes a substantial 25% increase in base wages over the contract's duration. In addition to wage improvements, the agreement also encompasses various other benefits.

Decision Process

Before President Fain's address, the UAW Ford Council will convene to determine whether to proceed with submitting the agreement to the membership for a vote. While it is expected that the Council will support the proposed deal, recent labor negotiations have proven unpredictable. The tentative agreement between UAW workers at Mack Trucks was rejected on Oct. 9, resulting in an ongoing strike.

Ratification and Return to Work

Despite the volatility of labor negotiations this season, it appears likely that the Council and UAW members will ratify the new agreement. Chuck Browning, Union Vice President and Director of the Ford department, has called upon Ford workers to return to work during the ratification process. Ford has confirmed that efforts to restart production at its plants are already in progress. Currently, approximately 17,000 UAW employees at Ford are on strike, with several thousand more temporarily laid off due to disruptions in production.

Impact Across Auto Industry

At present, an estimated 30% of the total UAW employee workforce at Ford, General Motors (GM), and Stellantis (STLA) is on strike. Production delays caused by the strikes have forced the closure of multiple plants, including those responsible for manufacturing profitable trucks and SUVs.

Further Developments with Stellantis

In related news, the UAW recently announced a tentative agreement with Stellantis. The proposal includes wage increases similar to those negotiated with Ford. Rich Boyer, Union Vice President overseeing Stellantis, also revealed that the UAW secured a commitment to create 1,000 battery manufacturing jobs related to electric vehicles at an idle plant in Belvidere, Ill.

Please stay tuned for more updates on this ongoing situation.

Ford and GM Agreements Awaited on Wall Street

Wall Street had high expectations for agreements from both Ford and GM following the recent deal with Ford. Historically, this has been the trend. According to Wedbush analyst Dan Ives, "With Ford getting a deal done we expect the other dominoes to fall with GM and Stellantis this week."

Strike Expansion at GM

While Stellantis successfully reached an agreement, GM faced an unexpected strike expansion. Workers at the Spring Hill, Tenn. facility, which produces various Cadillac and GMC products, walked out. The details of ongoing negotiations and the reason behind the strike expansion have yet to be disclosed by GM and the UAW.

Wage Equality and Union's Master Contract

The precise issues causing the impasse remain unknown, but wage negotiations are unlikely to be a major hurdle. It is expected that GM workers will receive compensation comparable to their counterparts at Ford and Stellantis. Additionally, the UAW previously announced that GM had agreed to include battery workers under the union's master contract, treating them similarly to those currently involved in gasoline engine and traditional transmission production.

Investor Implications

Investors are eagerly awaiting updates on negotiations at GM, as well as signs of progress in resolving the strikes at Ford and Stellantis. The extended duration of the strikes has negatively impacted the stock prices of both companies. Since July, Ford shares have plummeted by around 34%, while GM shares have fallen by approximately 29%. In contrast, the S&P 500 has experienced a 7% decline during the same period. Conversely, Stellantis, being a more globally-oriented company, has seen a modest 3% increase in its share price.

Apart from strikes, disappointing third-quarter earnings also weighed heavily on Ford's stock, resulting in a 12% drop on Friday.