GM: American Axle Strike Cost $2.82b

Robert Farago
by Robert Farago
gm american axle strike cost 2 82b

Another Friday, another bombshell from The General. Yes, once again, GM waits until the markets head-off for the Hamptons before revealing some bad news. Last time, out it was Rick Wagoner's $14.4m annual pay packet– which was good news for Mr. Wagoner and his heirs, bad news for management accountability. This time it's GM's SEC filing re: the cost of the American Axle strike. And there it is: $2.82b. Automotive News [sub] breaks it down this way: "GM estimated that it suffered a $1.8 billion impact in the second quarter alone. That's on top of $800 million from lost production during the first quarter and another $215 million in assistance GM offered to American Axle to finance employee buy-downs and buyouts." Two-hundred-and-fifteen? Hey, what's $15m between friends? Anyway, the total damage makes the cost of the United Auto Workers (UAW) strikes at two GM plants seem like a bargain, at just $200m. Yesterday, we totally missed that Standard & Poor's upped GM to a "B" rating, five levels below investment grade. Reuters reported "The outlook on GM remains negative, meaning a rating cut is still possible. The risk of a downgrade would increase if GM's lower-than-expected U.S. light-vehicle sales through 2009 result in pushing the company's liquidity toward 'undesirable levels,.'" And the next day, a Friday, GM reveals the hit. Huh.

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4 of 7 comments
  • Robert Schwartz Robert Schwartz on May 24, 2008

    Is that because they were not able to add to their inventories of unsold Tahoes and Yukons?

  • Skooter Skooter on May 24, 2008

    You mean the strike actually cost GM? Hard to believe. And they said 215 million in assistance instead of rounding the number down? Wow.

  • Holydonut Holydonut on May 24, 2008

    I wonder if they are including a valuation for the higher warranty costs they plan on incurring when the irate workers return to the line to make those axles.

  • CarShark CarShark on May 24, 2008

    @Skooter: Why downplay the HUGE effect that could have on a company? That's $2.82 billion less they could spend on new products or new facilities or a good marketing campaign.