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Stellantis (STLA) Strikes Deal to Address UAW Members' Concerns

Stellantis N.V. STLA announced that United Auto Worker union members who had gone on strike on Sep 10 at its casting plant in Indiana are rejoining work after a ratifying deal was made between the parties.

The sprawling plant in Kokomo, IN, is known to be the world’s largest die-cast facility, per Stellantis' website. It produces aluminum parts for automotive components, transmissions and transaxle cases, engine block castings and parts used in the power trains of Chrysler, Dodge, Jeep and RAM vehicles.  Both UAW Local 1166 and Local 1302 represent the workers at the plant.

The worker union noted that the working environment at the plant has been deteriorating over the years due to Stellantis’ decision to cut back funds used for proper maintenance and to provide the proper HVAC in the plant.

On Sep 6, under the instructions of the UAW Local 1166, officials gave a letter of intent to call off the local contract and all extension agreements. The strike was then called in demand of basic requirements and paid uniforms for workers performing particularly dirty jobs.

Following this, more than 1,000 UAW members went on strike on Sep 10 at the plant because the company had deprived them of the basic health and safety needs that a workplace should offer. They alleged that the company refused to repair and replace the plant’s air conditioning and heating systems to secure in-house production.

The two sides had tentatively announced an agreement and the strike was withdrawn after UAW Local 1166 workers voted to ratify the agreement. A prolonged strike at the largest casting facility would have led to a production hiatus, causing the rapid shutdown of all of the company’s operations and its profits to tumble.

In the last month, the Kokomo casting plant formed a part of a $99-million investment in three North American plants to produce a new 1.6-liter, I-4 turbocharged engine that can support gas-powered and hybrid-electric powertrains. More than $14 million of that investment has been earmarked to convert existing die-cast machines and cells to produce the engine blocks at Kokomo Casting.

In May, Stellantis announced a joint venture with South Korea-based battery manufacturer Samsung SDI to construct a new $2.5-billion electric vehicle battery plant in Kokomo. It is one of two battery plants that Stellantis announced in North America, the other being in Windsor, ON.

As the electric vehicle revolution continues reaching new highs, auto companies are undertaking intensive investments to rev up their respective electrification efforts. In doing so, the companies are resorting to cost-cutting efforts in parallel. However, it must not be so that employees’ safety concerns are made the targets of cost-cuts and their grievances overlooked in the process.

Shares of Stellantis have lost 30.3% in the past year compared to its industry’s 32.5% decline.

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Zacks Rank & Other Key Picks

STLA sports a Zacks Rank #1 (Strong Buy), currently.

Some other top-ranked players in the auto space are BorgWarner BWA, Tesla Inc. TSLA and LCI Industries LCII, each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

BorgWarner has an expected earnings rate of 2.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 0.7% upward in the past 30 days.

BorgWarner’s earnings beat the Zacks growth Consensus Estimate in all the trailing four quarters. BWA pulled off a trailing four-quarter earnings surprise of 29.45%, on average. The stock has declined 10.9% in the past year.

Tesla has an expected earnings growth rate of 76.5% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1% upward in the past 30 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 32.17%, on average. The stock has increased 18.7% in the past year.

LCI Industries has an expected earnings growth rate of 68.1% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in all the trailing four quarters. LCII pulled off a trailing four-quarter earnings surprise of 26.48%, on average. The stock has declined 8.9% over the past year.


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