Investors’ sense of relief about the end of the United Auto Workers’ strike against the Detroit Three auto makers is giving way to modest concern about whether new contracts will be ratified, especially at General Motors.
Investors shouldn’t worry.
GM stock (ticker: GM) closed down 0.2% on Wednesday, while
Stellantis
(STLA) and
Ford Motor
(F) gained 1% and 0.7%, respectively. The S&P 500 and Dow Jones Industrial Average gained 0.2% and 0.5%.
The number that is causing the relative underperformance appears to be 54%. That is the percentage of “yes” votes the deal is getting at GM, which trails the figures at both Ford and Stellantis.
Ford was the first of the three to reach a tentative agreement with the UAW. The deal, which is similar to those reached at GM and Stellantis, includes base wage increases of roughly 25% over four-plus years, including an 11% pay increase upon ratification.
About 27,000 UAW-represented Ford workers have voted so far with almost 18,000, or 66%, voting yes. Ford has roughly 57,000 UAW-represented workers so, in theory, 28,501 votes are needed to ratify the deal. That’s another 10,500 or so.
But it might not come to that. The voting deadline is Friday, according to people familiar with the process. The deal would be ratified if more people have voted “yes” than “no” at that point.
Ford reached its tentative agreement on Oct. 26 and the union sent the deal to members on Oct. 29. Those dates indicate workers have had about 18 or 19 days to cast ballots, meaning it is taking longer to get approval than the roughly nine days ratification took when the UAW struck GM for 40 days in 2019.
Things might have happened faster in 2019 because workers didn’t go back to the plants before ratification. This year, the UAW sent the workers back after reaching tentative agreements.
Based on the Ford timeline, the Stellantis voting period would end about a week from Wednesday. The GM deadline would be a day or two after that.
About half of Ford’s UAW-represented workers have voted, based on the latest periodic updates from the union. The percentages for Stellantis and GM are about 30% and 67%, respectively.
Why GM is faster is anyone’s guess. It could be how the individual union locals are managing the process. Why a smaller share of GM workers are voting yes than at Ford also is a mystery. The union and GM didn’t immediately respond to requests for comment.
The most likely reason is differences in the breakdown between temporary and permanent UAW workers at each company. The deal was very good for temporary workers, while full-time employees might believe they should get more.
While the 54% figure is generating drama GM should need only about 6,350 votes to ratify the deal. That amounts to a “yes” rate of about 42% in the remaining voting.
At worst, ratification at GM looks likely. At Ford and Stellantis ratification looks all but certain.
And if workers at GM do vote the deal down, it would mean more negotiation, rather than everyone just walking off the job. A renewed strike would be a union decision, but it just isn’t likely to come to that.
Write to Al Root at [email protected]
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