General Motors confirmed the C$554 million-four-year deal with Canada’s Unifor to ensure job security for almost 4,000 workers of the automotive company. The approval came on Monday whereas plants in St. Catherines and Oshawa would benefit from the C$150 million and C$400 investments respectively. Apart from the allocation of considerable amount, GM Canada also worked out the elimination of $2.6 billion deficit in the pension plans of the concerned employees.
After the deal with the union, can the company attract more investors or will it just send the stock in the negative territory?
Ratification of Investment
Unifor, trade union in Canada, disclosed the ratification after the agreement of more than 60 percent of the workers who voted on Sunday. The union did not provide any specific details of the benefits pensions of the newly hired employees, however, wage increases was part of the deal.
This deal between the union and the auto company serves as a patterned bargaining. Pattern bargaining is a process wherein a trade union acquires a news and superior entitlement from one employer and then the agreement will be used as a precedent to demand the same entitlement or a superior one from other employers.
GM spokesman Tom Wickman of GM Canada expressed the company’s desire to participate in any potential agreements with the government and concerned parties to heighten competitiveness in the market.
Reports revealed that after GM, the union is working towards agreement an agreement with Fiat Chysler Automobiles NV and Ford Motor Company. The contracts of the said auto companies are bound for negotiation as well. Unifor intends to make a deal with Fiat Chrysler, which creates the Chysler 300 and Dodge Challenger, to innovate its paint shop and to discuss the path of its plant in Toronto later today.
Unifor President Jerry Dias reiterated on its recent interview that the union needs some clarification, answers and commitment towards the plans of the concerned companies. Further, Mr. Dais said “The gains made in this agreement are historic and more than what has been achieved in the past 10 years. Unifor has shown what is possible when workers have a union, and a united bargaining committee to speak on their behalf.
Meanwhile, amid the investment ruling, general motors restated its stand regarding its profit guidance. The Detroit, Michigan based company said that it is still a compelling investment opportunity and its cost cutting efforts are pushing through accurately.
Instead of offsetting incremental investments in some of its sectors, the company has cut around $3 billion in costs from 2015 until the second phase of the year. CEO Mary Barra has been convincing the market players that the company is still a compelling investment opportunity due to its high cost cutting and the modification of the profit guidance.
After the company’s second quarter earnings report two months ago, General Motors is looking for a probable chance to have $5.50 to $6 earnings per share and to attain $5.5 billion from its operational and functional costs savings in two years’ time.
General Motors had a net revenue of $42.4 billion, advancing for almost 11 percent. Its EPS diluted was $1.81 while its EPS diluted-adjusted came as $1.86. The EBIT-adjusted showed a 37 percent increase to $3.9 billion as the company’s branch in North America gained an EBIT adjusted of $3.6 billion with a 12.1 percent margin.
After the remarkable profit in the first 6 months of the year, General Motors keeps on putting the customers at the center of what they do as part of their firm commitment in the market. The company puts effort on game-changing innovations and better-than-ever capital framework which makes them prepared in any market turbulence.
Even though the company remains optimistic on its path, hares of the American multinational corporation lost 0.27 percent in the session earlier, extending the lost for successive days. With a market capitalization of 50.61 billion and a trading volume of 9.79M, the stock moved in the red territory. Currently, GM has a price earnings ratio of 4.11 and a dividend yield of 4.73 percent.
Apparently, the stock price movement does not complement the views of the company. GM has remained in a tight trading range in the third quarter. A potential volatility could be seen after the contraction. Investors must be keen with the impending uptick of the stock and seize the opportunity if ever. The way the company deals with its investment and future plans, only proves one thing – GM is heading to a better-than-expected third quarter earnings.