The United Auto Workers (UAW) union is reportedly bowing to the pressure from the Big Three automakers in their wage negotiations. As per a Wall Street Journal report, the UAW has agreed to accept a mid-30% wage increase instead of the 40% hike demanded earlier. The union and carmakers, namely General Motors (NYSE:GM), Ford (NYSE:F), and Stellantis (NYSE:STLA), have been exchanging multiple contracts in recent times, although no deal has been finalized yet.
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The old labor contract ends on Thursday, September 14, with the UAW threatening to go on strike if demands are not met. Even so, the current softness in negotiating terms reflects that even the UAW fears the implications of a strike. A prolonged strike could mean lengthened negotiations and more business loss.
The negotiations that began in July have taken a somewhat positive tone lately, albeit at a slow pace. The new four-year contract initially involved a 20% hike on the contract’s ratification and a further 5% hike in each of the four years. This would imply a 46% increase over the life of the contract. However, with the mellowed-down talks, the new contract could total a 36% wage increase over the contract’s term. Besides pay, the union also seeks better medical benefits, a return of the cost of living adjustments, and a shortened 32-hour working week.
Meanwhile, the Big Three pose rather different prospects for investors. Let’s see how the three stocks are expected to perform based on the TipRanks Stock Comparison tool. Evidently, Stellantis is the only carmaker to command a Strong Buy consensus rating and earn a TipRanks Smart Score of 9, which implies that STLA stock has the ability to outperform the broader market over the long term.
