The Ford Motor Co. (NYSE:F) and the United Auto Workers (UAW) union finally reached a tentative labor deal on Wednesday night, ending a massive strike that started in mid-September. The deal allows for a 25% salary increment over the contract’s four-and-a-half-year life. Workers will get an 11% jump in the first year alone.
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The contract is subject to UAW workers’ approval, but UAW President Shawn Fain has asked employees to return to their duties while the ratification process is ongoing. F stock, which has been under pressure since the onset of the union strike, rose nearly 2% on the news in extended trading.
Additional Details on the Ford-UAW Deal
Other benefits include cost-of-living adjustments, the right to strike over future plant closures, and a reduction in the time it takes for a new worker to earn the top wage, to three years from eight. Including all the benefits and considering the compounding effect for four years, the new labor contract amounts to more than a 33% wage hike. Also, the assembly line workers could end up earning $40 per hour based on the revised contract.
The new labor contract covers 57,000 UAW-represented workers at Ford’s U.S. operations. The walkout from Ford’s Kentucky truck plant last week, Ford’s most profitable business to date, has seemingly worked magic for the union.
Ford CEO Jim Farley also announced that the company was pleased to have reached a deal with the UAW and awaited the resumption of production at its factories that have been idled since September 14. The UAW has successfully reached a favorable deal with one of the Big Three automakers, and this could well be a start for both General Motors (NYSE:GM) and Stellantis (NYSE:STLA) to follow. Reacting to the news, both companies stated yesterday that they are focused on reaching a tentative deal as soon as possible.
Is It Good to Invest in Ford?
With the UAW strike behind us, it indeed seems like a good time to invest in Ford. It is worth noting here that analysts have not yet reviewed the tentative labor deal between Ford and the UAW and are yet to give their latest ratings and price targets.
Meanwhile, based on the data currently available on TipRanks, Ford has a Moderate Buy consensus rating. This is based on six Buys, seven Holds, and one Sell rating. The average Ford Motor Co. price target of $15.14 implies 31.2% upside potential from current levels.
