General Motors Company (GM - Free Report) and Canada’s Unifor Union have signed a deal that the workers voted 64.7% to ratify, minutes before a strike deadline. The new 4-year contract will help the workers secure their future in a weakening auto sector in Canada and ensure an investment of about C$554 million, or $420.84 million by the company in its Canadian facilities.
General Motors will be investing a majority of the promised amount at the Oshawa and St. Catherines manufacturing plants in Ontario. The two plants are expected to receive C$400 million ($303.86 million) and C$150 ($113.95 million) million, respectively. Post investment, the Oshawa plant will be the company’s first facility in North America to manufacture both trucks and cars. On the other hand, the St. Catherines engine and transmission plant will be able to accommodate an engine production shift from Mexico to this plant. An investment in the parts distribution center at Woodstock is also expected.
Additionally, the deal includes a 2% wage hike for the workers immediately and another 2% in Sep 2019. The employees will also be paid a bonus of C$12,000 (over $9,100) over three years, half of which will be paid as a signing bonus. Moreover, improvements will be made to the New Hire program and 700 supplemental workforce employees will be converted to full time workers. However, the labor pensions are now less favorable as the union gave it up for new hires.
Unifor represents about 4,000 General Motors employees. This is the first agreement, this year, the union signed with the Detroit Three, which includes Fiat Chrysler Automobiles N.V. (FCAU - Free Report) and Ford Motor Co. (F - Free Report) , and General Motors. The union represents roughly 16,000 employees of the other two automakers. The next negotiation for the union will be with Fiat Chrysler, for which the General Motor deal will act as a basis, before the tentative strike deadline of midnight of Oct 10.
General Motors currently carries a Zacks Rank #3 (Hold).
A better-ranked auto stock is Cooper-Standard Holdings Inc. (CPS - Free Report) . The company has witnessed positive estimate revisions in the last 60 days and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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