General Motors inks a Ford-like tentative agreement with UAW

By:
on Oct 30, 2023
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  • General Motors Co has reached a tentative agreement with the UAW.
  • The automaker offered a similar deal to the union as Ford did last week.
  • GM stock is currently down over 35% versus their year-to-date high.

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General Motors Co (NYSE: GM) has reached a tentative agreement with the United Auto Workers. Its shares are still down 1.0% at writing.

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Here’s what GM agreed to offer

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On Monday, the automaker agreed to restore cost-of-living adjustments and a 25% wage increase among other benefits – similar to what Ford Motor Co offered the union last week.

The preliminary agreement will likely put an end to the strike that started on September 15th. It still needs to be ratified by its UAW members first, though.  

Bloomberg was the first one to report that GM and the United Auto Workers have reached a tentative agreement on Monday.

Last week, General Motors removed its full-year guidance citing uncertainty related to the ongoing strike. Its shares are down 35% versus their year-to-date high.

GM will now see higher labour costs

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In just over a month, the UAW strike cost General Motors close to $1.0 billion.

Its rival Ford recently said that the tentative agreement, if ratified, will lift labour costs by up to $900 per produced vehicle. According to Deutsche Bank, a potential deal could result in a $7.2 billion increase in overall cost at GM over the term of the agreement.

Note that the preliminary deal between General Motors and the UAW will boost top wage to over $40 per hour and increase starting wages by a whopping 68% to $28 per hour.

Wall Street currently has a consensus “overweight” rating on shares of the car manufacturer that last week abandoned plans of building affordable EVs with Honda (read more).

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