Investors are breathing a sigh of relief as the United Auto Workers (UAW) strike against Detroit's big three automakers comes to an end. However, their attention has shifted to the ratification process for the new contracts, particularly at General Motors (GM).
GM Stock Wavers, Ford and Stellantis Show Positive Growth
Following the end of the strike, GM stock (ticker: GM) experienced a slight decline of 0.2% on Wednesday. In contrast, Stellantis (STLA) and Ford Motor (F) witnessed gains of 1% and 0.7% respectively. The broader market saw the S&P 500 and Dow Jones Industrial Average increase by 0.2% and 0.5% respectively.
The Struggle Lies in the Numbers
A key concern contributing to GM's underperformance is the current voting percentages for the deal. As of now, only 54% of "yes" votes have been recorded for GM, while both Ford and Stellantis have higher figures.
Ford Sets the Pace with Tentative Agreement
Ford Motor was the first among the Detroit Three to reach a tentative agreement with the UAW. The deal bears similarities to those struck with GM and Stellantis, offering an approximate 25% increase in base wages over four-plus years, including an 11% pay raise upon ratification.
Progress at Ford, But Uncertainty Persists
Out of the approximately 27,000 UAW-represented Ford workers who have voted thus far, nearly 66% (around 18,000 workers) have approved of the agreement. With approximately 57,000 UAW-represented workers at Ford, about 10,500 more votes are needed to reach the quota of 28,501 required for ratification.
Striving for Ratification before the Deadline
According to insiders, the voting deadline is set for Friday, providing workers with a limited timeframe to cast their votes. If the number of "yes" votes surpasses the "no" votes by this deadline, the deal will be ratified.
A Lengthy Ratification Process
Notably, Ford's tentative agreement was reached on October 26, and the deal was sent to union members on October 29. With a span of approximately 18 to 19 days for workers to cast their ballots, the duration for approval is longer compared to the approximately nine days it took for ratification during the 40-day UAW strike against GM in 2019.
Key Details Emerge from UAW Voting
In 2019, the UAW encountered a delay in the ratification process as workers did not return to the plants before reaching an agreement. However, this year, the UAW sent the workers back to work after reaching tentative agreements.
According to the Ford timeline, the voting period for Stellantis is expected to conclude approximately one week from Wednesday. On the other hand, the GM deadline would be a day or two later.
The latest updates from the union indicate that around half of Ford's UAW-represented workers have already cast their votes. As for Stellantis and GM, the percentages of workers who have voted are approximately 30% and 67% respectively.
It remains unclear why GM is progressing at a faster pace. It is possible that the individual union locals are managing the process differently. Furthermore, the reason behind a smaller proportion of GM workers voting in favor compared to Ford workers remains a mystery. However, neither the union nor GM has provided an immediate response or comment.
The most plausible explanation for these differences lies in the breakdown of temporary and permanent UAW workers at each company. The deal offered significant benefits for temporary workers, which may have influenced their support. Meanwhile, full-time employees might feel that they deserve more.
Despite the ongoing drama surrounding the 54% figure, GM only needs approximately 6,350 votes to ratify the deal. This translates to a remaining voting "yes" rate of about 42%.
At worst, it appears likely that ratification at GM will be successful. On the other hand, ratification at Ford and Stellantis seems almost certain.
If, by chance, the workers at GM reject the deal, it would not lead to an immediate strike. Instead, further negotiation would be necessary. Ultimately, the decision to initiate a renewed strike would be up to the union; however, it is highly unlikely to reach that point.
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