Another member of the “Big Three” automakers may finally be able to move forward from the United Auto Workers (UAW) strike. According to recent reports, General Motors (NYSE:GM) has reached a “tentative labor agreement” with the union.
Per CNN, no one from either the company or the UAW has officially confirmed the deal as of now. However, if these claims are true, the agreement will represent a major step forward in resolving the historic labor dispute. Indeed, the strike has halted production from GM, Ford (NYSE:F) and Stellantis (NYSE:STLA) across the United States lately.
As Ford and Stellantis have already reached similar deals with the UAW, it makes sense that General Motors would be taking steps to do the same. The multi-month strike has lasted longer than many likely expected. But does this mean that this historic labor effort is likely to end soon? Let’s take a closer look.
What’s Happening With GM Stock?
After a poor start to the morning, GM stock is on the rise today. As of this writing, shares of General Motors are up by less than 1% but look like they can keep rising. So far, GM is also outperforming Ford, which is down nearly 2% for the day. Meanwhile, STLA stock is down just slightly as of this writing.
Overall, the market should be optimistic that the “Big Three” are all working to move forward from the strike. Granted, the details of the potential General Motors-UAW deal are still emerging. But as noted, the company has high incentive to reach a deal and get production back on track. Per CNN:
“Terms of the deal are not yet known, but it is expected to be along the lines of the deals already announced at Ford and Stellantis, including an immediate 11% raise in the top hourly wage rate, additional pay hikes totaling another 14% during the four-and-a-half years of the contract, as well as a return of the cost-of-living adjustment (COLA) meant to protect workers from rising prices.”
It’s also worth noting that this isn’t the first move that GM has made toward ending the strike recently. Last week, the firm agreed to provide a 25% wage increase for UAW workers, as did Stellantis. Bloomberg reports that the offer made by the auto giant included cost-of-living increases over a contract of more than four years. Now, it seems that the company is going even further to reach an agreement with the union.
What Comes Next?
With all that in mind, it’s still important to remember that the “tentative” agreement is not yet a done deal. Agreements with all three automakers “will need to be ratified by rank-and-file members before they take effect.” So, it’s always possible that members could vote down the deals on the table. However, it seems that the three companies want to reach an agreement and will do what it takes to accomplish that.
If the strike does end, GM stock will likely rise along with its peers. As InvestorPlace contributor Larry Ramer notes, once the labor dispute is resolved, General Motors in particular could be in an excellent position to mount a comeback in 2024. After weeks of uncertainty, the end finally seems to be in sight.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
