The United Auto Workers announced a tentative agreement with defense contractor
General Dynamics
on Monday.
The potential deal affects about 1,100 workers in Ohio, Michigan, and Pennsylvania, according to the UAW. The plants manufacture armored vehicles such as the Abrams tank.
General Dynamics
stock (ticker: GD) was up 0.4% in midday trading. The
S&P 500
and was up 0.4%, and the
Dow Jones Industrial Average
was flat.
The four-year deal provides 14% wage increases over the life of the contract as well as inflation protection, the union said. It must still be ratified by members.
General Dynamics
and the UAW didn’t immediately respond to requests for comment about additional contract details.
The wage increase included in the tentative deal with General Dynamics is less than the roughly 23% in wage increases being offered by the Detroit-Three auto makers in an attempt to end a strike affecting
Ford Motor
(F),
General Motors
(GM), and
Stellantis
(STLA). That strike will turn 40 days old this week.
Auto workers, however, have made significant concessions over the past 15 years to help the car makers become more consistently profitable. The defense industry is more stable. Its workers didn’t likely have to make concessions as large.
General Dynamics’ operating profit margins have fluctuated from essentially 10% to 13% over the past 10-plus years. Auto makers have swung from losses to profits over the same span.
Shortly before the UAW announced the tentative deal with General Dynamics, the UAW decided to walk out of Stelantis’ Sterling Heights Assembly Plant in Michigan. That plant makes pickup trucks, a big profit generator for Stellantis.
It is a sign that the UAW leadership isn’t ready to bring a tentative agreement to any of the Detroint-Three auto makers yet.
UAW members working at Mack Trucks recently voted down a tentative agreement union leadership brought to them for a vote. Those two sides have to go back to the table.
Mack Trucks is owned by the Volvo AB truck-manufacturing business, which is publicly traded (ticker: VOLV.B.Sweden). China’s Geely controls the Volvo automobile brand.
Write to Al Root at [email protected]
Read the full article here