The 40-day UAW strike against General Motors cost the automaker over $2 billion USD and postponed production of roughly 300,000 vehicles – negatively affecting its earnings for 2019 and delaying the launch of new vehicles like the 2020 Chevrolet Corvette.
However, the strike also had a negative impact on GM’s various supplier partners, as outlined by Reuters. The news agency did a rundown of all the GM suppliers that had been affected by the UAW’s lengthy strike, with some losing hundreds of millions of dollars.
The hardest-hit supplier was Canadian automotive parts maker Magna International Inc. GM is the company’s biggest customer, and as such, it took a full-year sales hit of about $500 million USD. The company, which makes a large variety of products such as chassis and powertrain parts, cut its yearly sales outlook by over $1 billion this week – mostly due to the GM strike. It expects a net income of between $1.8 billion and $1.9 billion for 2019, down from its previous estimate of $1.9 billion and $2.1 billion.
“We have made some adjustments to our outlook largely to reflect estimated lost volume related to the GM strike and higher launch costs,” Magna’s Chief Financial Officer, Vincent Galifi, told Canada’s Financial Post this week.
American Axle & Manufacturing Holdings also took a heavy hit of about $250 million to its full-year revenue, forcing it to lower its 2019 earnings forecast as well. Similarly, auto parts supplier Aptiv expects a total hit of around $250 million to its business, while Tenneco, another auto parts supplier, expects a fourth-quarter hit of around $35 million. Reuters‘ report also outlines several other U.S. suppliers that have been negatively impacted by the UAW strike, reporting millions of dollars in losses.
The worst may still be yet to come for GM itself, too. In October, financial expert David Kudla, who is the CEO of Mainstay Capital Management, told The Detroit Free Press that the “brunt of the strike will be felt in the fourth quarter as there were more days of work stoppage (after Sept. 30) and GM will be playing catch-up on now lower inventories and shortages of hot-selling vehicles.” The same could be true for suppliers, as any stoppage in GM assembly lines causes stoppages and backlogs at their facilities as well.
GM reported $2.3 billion in income on $35.5 billion revenue for Q3 2019 – with income down 8.7 percent (about $200 million USD) compared to Q3 2018. This year-over-year loss was mostly due to the strike impact.