Will Ford Workers Approve Their New Contract?

By John RosevearFool.com

Ford's U.S. factory workers are voting this week on whether to accept a new four-year labor contract. Image source: Ford Motor Company.

What's happening: Workers at Ford facilities in the U.S. are voting on whether to accept a new four-year labor agreement hammered out between the Blue Oval and the United Auto Workers (UAW). Several UAW locals have already voted on the deal, and voting is expected to continue for another few days.

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How's the voting going? Officially, the UAW won't say until all of the workers have voted. But according to reports in the Detroit Newsand Detroit Free Press, close to a third of eligible workers have voted. So far, the reports say, the tally is running in favor of approval.

But it's not a done deal. A slim majority of workers at Ford's big facility new Kansas City, which makes F-150 pickups and Transit vans, voted to reject the deal on Sunday. Workers at Kansas City had threatened a strike during contract negotiations, but their concerns were addressed by Ford at the time.

If Kansas City's concerns are shared by other Ford workers, the voting could swing against the deal.

Isn't approval a foregone conclusion? Not necessarily. Workers at Fiat Chrysler rejected their initial pact before voting to approve a sweetened deal. That sweetened deal served as the basis for the UAW's agreement with General Motors. GM's deal has hit a snag after specialized "skilled trades" workers voted against it; GM and UAW leaders have returned to the negotiating table to address their concerns.

Ford's deal, which was completed after GM workers had finished voting, appears to have anticipated the objections raised by GM's skilled tradespeople.

It's not clear why the UAW local at Kansas City voted against the deal. Under the new contract, Ford committed to a $200 million investment in the Kansas City facility to continue making the F-150 and the Transit vans.

Overall, the new contract commits Ford to $9 billion in spending at U.S. facilities, adding or retaining 8,500 jobs.

What if workers reject the deal? Most likely, the UAW leadership would spend a few days talking to Ford workers in order to understand their concerns, and then ask Ford to return to the negotiating table. After Fiat Chrysler workers rejected their first tentative agreement, the UAW and FCA were able to hammer out an improved deal that won workers' approval. It's likely that Ford and the UAW would make at least one attempt at an improved contract before anything more drastic happened.

But if Ford and the UAW's leaders were to reach a hard impasse, the UAW could resort to strikes.

What do Ford investors need to do? Keep an eye on the progress of voting this week. While an approval would be good news -- labor peace is very valuable -- it will be unlikely to move the stock significantly.

But a rejection that leads to a breakdown in negotiations could turn out to be very expensive for Ford. That would move the stock, and not in a good way.

The article Will Ford Workers Approve Their New Contract? originally appeared on Fool.com.

John Rosevear owns shares of -- and The Motley Fool recommends -- Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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