© Reuters. Ford (F) reaches tentative deal with UAW to end strike after 6 weeks
Following almost 6 weeks of strikes, Detroit’s Ford Motors (NYSE:) and the United Auto Workers union announced late on Wednesday that the two have come to a tentative agreement on the terms of a new labor contract.
While the final details of the agreement are still being prepared, analysts at Barclays remain Neutral on the automaker as they believe the headline terms are likely already priced into the stock.
The UAW also announced that striking members will return to work during the ratification process.
With the strike ending after nearly 6 weeks, analysts at Barclays estimate that the company lost 10-12K units, and approximately $100 million during the third quarter. In the fourth quarter, the estimated loss surged to around 50,000 units, amounting to $500 million to $600 million.
Analysts at J.P. Morgan updated their strike cost and future contract cost analysis following the announcement and now estimate that the strike cost Ford approximately $1,092M spread between 3Q (~$166M) and 4Q (~$926M).
The union announced that the contract will include a 25% wage increase, which, along with other improvements including the return of COLA provisions, is expected to total about 33% over the contract’s lifespan.
UAW President, Shawn Fain recorded a video message on Wednesday to announce that in the event of the UAW National Ford Council’s anticipated approval of the contract on Sunday, the union plans to conduct a Facebook live session on Sunday evening to discuss the specifics of the contract. Following this, the contract will be sent to UAW-Ford members for a majority up or down vote.
While members have, on occasion, rejected previous contracts, analysts at J.P. Morgan expect enthusiastic support for this year’s agreement.
Ford is scheduled to release the company’s third-quarter earnings results after the market closes on Thursday. However, it is unlikely that the company will discuss the specifics of contract costs prior to the Ford-UAW membership ratification.
Shares of F are up 3.12% in pre-market trading on Thursday.
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