The GM strike is now well into its third week, with roughly 50,000 United Auto Workers (UAW) union members participating in a walkout at GM facilities around the nation. In response, analysts are looking into how the strike may be affecting General Motors financially, with the latest indicating the automaker may have lost out on $1.14 billion in profit.
That figure comes from JP Morgan analyst Ryan Brinkman, who made his estimate in a note to investors on Monday.
“GM’s U.S. production stopped immediately when the UAW walked off the job September 16 and we estimate its Canadian and Mexican facilities became progressively impacted throughout the first week,” Brinkman said.
By the end of the second week of the GM strike, as the automaker’s North American production essentially ground to a halt, Brinkman said that GM lost about $575 million in potential profit, while first-week losses amounted to $480 million. Brinkman also estimated that GM is losing around $82 million in potential profit in North America for every day that the strike continues.
The JP Morgan analyst also pointed out that GM could possibly recover some of the lost profits by shifting production from the third quarter to the fourth quarter.
Outside of General Motors, the GM strike is affecting supplier companies, with Brinkman indicating that American Axle & Manufacturing Holdings Inc., as well as Tenneco Inc. were most heavily impacted by the GM strike.
Brinkman’s estimates are the latest in a line of speculation from financial experts as the GM strike drags on. Last week, we reported on a report from Credit Suisse analyst Dan Levy, who estimated that GM may have missed out on upwards of $544 million in profit, stretching up to $700 million by Sunday.
Once again, we have to mention that these numbers require a least a grain of salt. As we outlined previously, GM would only lose money if it wasn’t selling cars, and dealers still have a relatively healthy inventory to fall back on.
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Comments
here is a story about autoworkers at the honda plany in marysville(OH). not a single day of work stoppage. workers seem happy. and non-union.
https://www.detroitnews.com/story/business/autos/foreign/2019/09/30/hondas-marysville-ohio-auto-plant-prospers-without-union/2437268001/
Steve
Honda just cut production at Maryville OH down to 1 shift. Maybe those workers are happy that they still have a job.
And how would it be different with a union? It did not help Lordstown.
“And how would it be different with a union? It did not help Lordstown.”
Well the UAW would demand in their collective bargaining agreement that the shifts remain in spite of any decreased market demand; keeping the plants running to keep the workers building cars (like sedans for example) that and keep crapping up the market forcing GM to offer rebates and heavy end of year discounts to move unsold units. GM would have to continue to pay those UAW worker for their labour, even if GM has to put money on the hood to move them off the lot.
UAW management would continue to collect fees and dues fully aware that they are impeding GM’s ability to compete in a contracting market, let alone hot ones.
Then people on GMA complain about how it’s GM management’s fault that their sedans aren’t selling to a market that doesn’t want them.
Honda’s Marysville plant did build Accord coupes, but they still have a lock on CR-V production ….something that isn’t slowing down any time soon.
You just can’t plan for the future when there’s no clear idea as to what the the future will look like as the UAW want guarantees for jobs that may or may not disappear once the company starts to electrify the fleet; GM Management cannot guarantee that some jobs will continue because there’s no real clear picture as to what future EV will look like as while they may share the Chevrolet Bolt architecture, there’s always the possibility that it will not.
Hopefully the Union and Management can find middle ground, and get back to work. For GM, they don’t want to have significant labor overhead in times of recession, and if the Union wants to ignore this, then GM could go broke again, quickly. Lots of competition in the auto business, from non Union operations.
GM does earn over $10 billion a year, but much of that has to be invested right back into the business for the future.
The article states:
“A competitive labor cost penalty of $13 per hour translates into (a roughly) $5 billion disadvantage for the company over a four-year contract period,
Very hard to stay in business with this disadvantage. While I think Sr GM leadership stinks their ONLY option is to cease all US production… or reduce costs to a competitive level. Which means crappy “jet black” plastic interiors (not competitive) or boring styling (not competitive) or automate everything as fast as possible. The UAW is going to render these employees into “former” employees… the free ride is simply not sustainable in a global economy.
start rebuilding Impala and Lacrosse reopen plants ,keep jobs in USA not all buyers want SUV ‘s or electric or we do want to drive our own cars
Not going happen with the current market projections.
Sedans are dying into insignificance, and reusing old nameplates with not magically restore things to how you once remembered them. Old memories are not a reliable indication of market trends.
It may be that not all buyers want SUV’s, the majority do.
As for EV and AV, if GM doesn’t offer it sooner, other automakers will beat them to the market. Compounding that is legislation for both environmental targets and traffic congestion mitigation. Once the EU and China mandate their use, NA will follow.
GM can still have heavy manufacturing jobs in the US, but it’s unrealistic to think that they’ll be building cars like they used to.