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Changing rates of inflation could make negotiations between Ford and the UAW more complicated.
Eric Thayer/Getty Images
Add labor relations to the challenges
Ford Motor
faces in terms of electric-vehicle pricing, production, and market share, not to mention the difficulty of selling cars when rising interest rates and inflation are leaving consumers with less spending power.
Wednesday, Wells Fargo analyst Colin Langan added the auto maker to the broker’s list of tactical ideas for the third quarter—a selection of stocks that the bank believes could be moved up or down by significant events expected in the coming three months.
Langan said Ford stock (ticker: F) could be dragged down as uncertainty mounts about approaching negotiations between auto makers and the United Auto Workers. “We expect a contentious negotiation given new UAW leadership and high wage expectation,” wrote Langan. “A 10% wage increase is our base case, which implies about $850M in [incremental] costs.”
Wages are expected to go up because inflation is much higher now than it was in 2019, when the industry and the UAW last negotiated a contract. Back then, inflation was running at around 2% a year, but it has averaged roughly 4.6% since the contract was signed. The average over the past 12 months is about 6.8%.
Those changing rates will make it more difficult for both sides to know what is a good deal.
“UAW contracts expire September 14 and one of the most important variables will likely be COLA,” or the cost-of-living adjustment, wrote Benchmark analyst Mike Ward in a Wednesday email.
Workers at
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