Auto workers’ strike pushes GM losses past $1 billion
The workers strike against General Motors - now in its third week - has cost the automaker more than $1 billion during the third quarter, according to a research note from J.P. Morgan analyst Ryan Brickman.
And those losses are accelerating with each passing week. GM lost about $480 million during the first week of the strike and another $575 million in the second, according to Brickman. GM is losing about $82 million of potential profit in North America every day.
TechCrunch will update the article if GM responds to a request for comment.
The effects of the production stoppage, which began September 16 when 49,000 United Auto Workers went on strike, is causing a ripple effect through the Detroit automaker's global operations. AP reported Tuesday that GM has shut down its pickup truck and transmission factories in Silao, Mexico, affecting 6,000 workers there. GM also had to close an engine factory in Mexico and an assembly plant in Canada because of the strike.
"GM's US production stopped immediately when the UAW [United Auto Workers] walked off the job on September 16 and we estimate its Canadian and Mexican facilities became progressively impacted throughout the first week," Brinkman wrote in his research note this week.
Jefferies analyst Philippe Houchois also weighed in this week, noting that the strike could restrict GM's ability to make investments.
While pay, benefits and the status of temporary workers are the primary drivers of the strike, so are concerns about changes within the automaker toward electrification. GM and the rest of the automotive industry are pouring money into developing electric vehicles. But this shift is also affecting workers because electric vehicles, which require fewer parts, are easier to build. The UAW has said the shift from gas to electric engines could lead to a loss of 35,000 jobs over the next few years, according to a research study conducted by the union and recently noted by CNBC.
Last November, GM CEO/Chairman Mary Barra announced plans to cut more than 14,000 jobs in North America, shutter factories and eliminate several car models in an effort to transform into a nimble company focused on high-margin SUVs, crossovers and trucks, and investments in future products like electric and autonomous vehicles.
The actions were meant to safeguard the automaker from an expected downturn in the U.S. market and increase GM's annual free cash flow by about $6 billion. But it has also caused discontent and concern among workers.