Bringing solace to Ford F, the Canadian labor union Unifor has ratified a new three-year collective agreement with the Detroit-based automaker, which is concurrently engaged in negotiations with its U.S. union over improved pay and benefits. The new agreement with Unifor encompasses the rights of more than 5,600 Ford workers across Canada. Notably, 54% of Unifor Ford members voted in favor of the new tentative contract.
Ford presents its union members with a wage hike of up to 25% within the new contract's tenure. Workers will witness a generous 10% wage increase in the inaugural year, followed by 2% and 3% raises in the subsequent years. Moreover, a productivity and quality bonus of $10,000 has been allocated to all actively employed members. A noteworthy aspect of this contract is the reduction in the duration for an in-progression employee to attain the top pay scale — now down from eight years to merely four. This aids workers who haven't yet reached the zenith of the pay scale, elevating the percentage they earn in the initial three years.
By the contract's culmination, the hourly rate of veteran employees will escalate from $37.33 to a significant $44.52, marking a 19.2% surge. With the union projecting an inflation rate of 2.5% over the forthcoming three years, top-scale members' wages are anticipated to further amplify to $46.13 per hour, including the cost-of-living adjustments. Besides the enticing wage hike, the renewed contract introduces substantial improvements in health benefits for both current members and retirees, along with several other lucrative offers.
This ratified deal signifies that Ford's workforce, distributed among three major plants in Ontario — Oakville Assembly, Essex Engine, and Windsor Engine — are once more under a contractual umbrella. Ford's present agreement extends to Unifor members working not only in Ontario-based plants but also in parts distribution hubs located in Bramalea, Paris, Ontario and Alberta.
Unlike the United Auto Workers (UAW), Unifor is negotiating exclusively with a single company at a given time. The move seeks to engage in pattern bargaining, which could potentially influence and set a precedent for ensuing negotiations with other industry players like General Motors GM and Stellantis STLA.
Ford evaded potential walkouts at its Canadian branches by clinching this last-minute agreement, set to last until Sep 20, 2026. In contrast, the UAW has intensified its strikes against General Motors and Stellantis in the United States. While the UAW acknowledges tangible progress in its discussions with Ford, it will persist with its strike at Ford’s Wayne, MI, plant.
Unifor's negotiation demands from Ford were pivoted around enhanced wages and pensions, assistance in the electric vehicle transition and increased investment pledges. As of now, negotiations with STLA and GM are ongoing, with hopes to prevent potential walkouts at their Canadian sites.
Zacks Rank & Key Pick
F currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
A better-ranked player in the same space is Tesla TSLA. This electric vehicle giant is riding high on robust demand of Models 3 and Y. Production ramp-up at Gigafactory 4 (in Berlin) and 5 (in Austin) and the introduction of new models, including Semi and Cybertruck, are set to support deliveries in the coming years.
The company currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2023 and 2024 sales implies year-over-year growth of 23% and 26%, respectively. TSLA surpassed estimates in the trailing four quarters, the average surprise being 8%.
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