2023-10-30 12:42:23 ET
General Motors Co (NYSE: GM) has reached a tentative agreement with the United Auto Workers. Its shares are still down 1.0% at writing.
Here’s what GM agreed to offer
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 15 th . 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
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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