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Auto ETF in Focus as Ford & UAW Reach Tentative Labor Deal
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In a significant development following a six-week strike, Ford Motor (F - Free Report) and United Auto Workers (UAW) union negotiators have reached a tentative labor deal that promises substantial pay increases for workers. This four-and-a-half-year contract, pending approval by union leaders and members, marks a historic achievement in the ongoing labor disputes involving 45,000 workers at Ford, General Motors (GM - Free Report) , and Stellantis (Chrysler-parent) since September 15.
Under the proposed agreement, Ford workers can anticipate a 25% wage hike over the duration of the contract. Immediate gains include an 11% wage hike. When considering compounding and the cost of living adjustments, the overall worker pay is expected to soar by approximately 33%, reaching beyond $40 an hour over the contract's lifespan.
Ford's Agreement Paves the Way for GM and Stellantis
The UAW's success in reaching a tentative agreement with Ford carries broader implications for the entire automotive industry. UAW President Shawn Fain has urged Ford workers to return to work promptly to exert pressure on General Motors and Stellantis to reach their own settlements.
If ratified by Ford workers, this contract is expected to set the standard for future negotiations at General Motors and Stellantis, effectively shaping the labor landscape until April 30, 2028.
Economic Impact and Stock Market Response
The strike, which has persisted for six weeks, has had a substantial economic impact. Estimates suggest total losses stemming from the auto workers' strike have reached a staggering $9.3 billion. This includes disrupted production and supply chain disruptions, affecting various sectors of the economy.
Furthermore, the stock market has reacted to this development, as General Motors shares slumped about 10% past month. General Motors withdrew its 2023 profit outlook. The company attributed this decision to the rising costs associated with the UAW strikes. Notably, the strike is estimated to have cost General Motors approximately $200 million during the September quarter.
The Nasdaq US Smart Transportation Index is a modified factor weighted index, designed to provide exposure to US companies within the transportation industry. Ford Motors has 8.53% exposure to the fund and also contains the first spot. General Motors Company too has about 7.8% in the fund. The fund charges 60 bps in fees. The fund is off about 7% past month.
Bottom Line
In conclusion, the tentative labor agreement between Ford and the UAW represents a significant breakthrough in the ongoing labor disputes within the automotive industry. It sets the stage for potential resolutions with General Motors and Stellantis as well. However, the strike's economic impact and its effect on the stock market has far-reaching consequences. For the near term, we expect a turnaround in the auto ETF.
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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Auto ETF in Focus as Ford & UAW Reach Tentative Labor Deal
In a significant development following a six-week strike, Ford Motor (F - Free Report) and United Auto Workers (UAW) union negotiators have reached a tentative labor deal that promises substantial pay increases for workers. This four-and-a-half-year contract, pending approval by union leaders and members, marks a historic achievement in the ongoing labor disputes involving 45,000 workers at Ford, General Motors (GM - Free Report) , and Stellantis (Chrysler-parent) since September 15.
Under the proposed agreement, Ford workers can anticipate a 25% wage hike over the duration of the contract. Immediate gains include an 11% wage hike. When considering compounding and the cost of living adjustments, the overall worker pay is expected to soar by approximately 33%, reaching beyond $40 an hour over the contract's lifespan.
Ford's Agreement Paves the Way for GM and Stellantis
The UAW's success in reaching a tentative agreement with Ford carries broader implications for the entire automotive industry. UAW President Shawn Fain has urged Ford workers to return to work promptly to exert pressure on General Motors and Stellantis to reach their own settlements.
If ratified by Ford workers, this contract is expected to set the standard for future negotiations at General Motors and Stellantis, effectively shaping the labor landscape until April 30, 2028.
Economic Impact and Stock Market Response
The strike, which has persisted for six weeks, has had a substantial economic impact. Estimates suggest total losses stemming from the auto workers' strike have reached a staggering $9.3 billion. This includes disrupted production and supply chain disruptions, affecting various sectors of the economy.
Furthermore, the stock market has reacted to this development, as General Motors shares slumped about 10% past month. General Motors withdrew its 2023 profit outlook. The company attributed this decision to the rising costs associated with the UAW strikes. Notably, the strike is estimated to have cost General Motors approximately $200 million during the September quarter.
ETF in Focus
First Trust NASDAQ Transportation ETF (FTXR - Free Report)
The Nasdaq US Smart Transportation Index is a modified factor weighted index, designed to provide exposure to US companies within the transportation industry. Ford Motors has 8.53% exposure to the fund and also contains the first spot. General Motors Company too has about 7.8% in the fund. The fund charges 60 bps in fees. The fund is off about 7% past month.
Bottom Line
In conclusion, the tentative labor agreement between Ford and the UAW represents a significant breakthrough in the ongoing labor disputes within the automotive industry. It sets the stage for potential resolutions with General Motors and Stellantis as well. However, the strike's economic impact and its effect on the stock market has far-reaching consequences. For the near term, we expect a turnaround in the auto ETF.
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)