General Motors (NYSE:GM) was quick to fix its issues in Canada. It reached a tentative agreement with Unifor, a Canadian auto workers union, just 13 hours after the strike commenced in GM’s three Canadian facilities. All 4,300 workers resumed work on Tuesday afternoon and are expected to ratify the deal soon.
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The new three-year deal includes a wage hike of between 20% and 25%. Also, GM will convert its temporary workers to full-time workers, who will receive a 28% hourly pay raise over the contract period. Additionally, the workers will achieve the highest pay scale in just four years, instead of the current eight years.
GM has also agreed to boost pension contributions and convert its defined-contribution pension plan to a defined-benefits plan on January 1, 2025. Moreover, full-time workers will receive $7,350 in lump-sum bonuses.
It is important to highlight that resuming operations at its Canadian facilities was crucial for General Motors. These facilities included a plant for assembling Chevrolet Silverado pickup trucks, an engine factory, and a parts distribution center. The Silverado is GM’s top-selling vehicle, and a prolonged strike could have negatively affected its sales.
Another major reason for a quick deal with Unifor was the ongoing United Auto Workers (UAW) union strike in the United States. The strike has already entered its fourth week and has led to significant production disruptions for all three major automakers: GM, Ford Motor (F), and Stellantis (STLA).
Deal or no deal, General Motors may find itself in an unfavorable position. The longer the UAW strike persists, the more production will be hindered, while significant wage increases and pension benefits for a larger number of workers will put a strain on the company’s bottom line.
Is GM a Good Stock to Buy Today?
Analysts remain cautiously optimistic about General Motors stock. On TipRanks, GM has a Moderate Buy consensus rating based on eight Buy, five Hold, and two Sell ratings. The average GM stock price forecast of $48.80 implies 55% upside potential from current levels. Year-to-date, GM stock is down 6.2%.
