GM's Strike Tab Now at $1 Billion, J.P. Morgan Claims

Steph Willems
by Steph Willems

The strike by UAW-affiliated General Motors workers, now in its third week, is piling up costs for the automaker. It’s also hiking financial pressure on the UAW, which just started paying out $250 a week to roughly 48,000 picketing workers in the United States.

As bargaining teams negotiate behind closed doors to reach a tentative contract agreement, the growing financial consequences of the labor action is hitting GM in another way: it’s now impacting GM’s stock price.

Blame J.P. Morgan, which just estimated the cost to GM now stands at $1 billion.

In a note to investors Monday, J.P. Morgan analyst Ryan Brinkman wrote, “GM likely has some ability to recover a portion of these lost profits by shifting production from 3Q into 4Q, although the automaker will also likely be limited in its ability to add production for vehicles already in high demand or in launch mode.”

That seemed to sour the automaker’s stock, which has until now weathered the strike just fine. In Tuesday trading, GM shares fell from $37.47 to $36.37 at last check — a drop of 3 percent. Hardly a calamity, but unwanted movement, nonetheless. It’s the lowest stock price since trading opened on Day One of the strike (September 16th).

GM’s North American operations provide the overwhelming bulk of the automaker’s global income; last year saw the region account for $10.8 billion of GM’s $11.8 billion in EBIT-adjusted income. An anticipated third-quarter hit of a billion dollars or more would be enough to spook investors.

As the strike grinds on, GM announced the idling of its Mexican workforce in Silao on Tuesday, pushing the number of non-UAW workers on temporary layoff to 10,000, The Detroit News reports. Two Canadian plants in Ontario went offline not long after U.S. workers walked off the job.

The Silao plant handles production of the Chevrolet Silverado and GMC Sierra, leading Jefferies analyst Philippe Houchois to write, “Even assuming a prompt return to production, tight capacity in key segments suggests GM may not recoup all lost production.”

[Image: General Motors]

Steph Willems
Steph Willems

More by Steph Willems

Comments
Join the conversation
5 of 27 comments
  • Akear Akear on Oct 02, 2019

    100 days.

    • See 1 previous
    • Highdesertcat Highdesertcat on Oct 03, 2019

      @Lorenzo If they even have savings. The vast majority of working people I know have NO "liquid" savings whatsoever, and live from paycheck to paycheck. (Liquid savings is defined as cash-money in the bank you can draw on whenever you want, that is not tied to a CD, Market Certificate, 401K, Roth IRA, Bonds, Treasury Notes, etc etc etc.)

  • Redgolf Redgolf on Oct 02, 2019

    highdesertcat - yes I do actually know of employees fired on a whim, my son along with several others were told to break in some new workers only to be pink slipped after the shift ended,that was several years ago and just as he was to get one year in, fortunately my son went on to become a certified plumber, I also have many friends who have worked there many years who tell me about the very high turn over rate, most all workers hired are temporary workers only, that has been going on for years!

    • Highdesertcat Highdesertcat on Oct 03, 2019

      redgolf, I appreciate you sharing that with us. Since I don't know the circumstances under which they were hired or let go, I can't draw any conclusions except to say I hope your son contacted a labor lawyer or referred this matter to the EEOC for review. My (former) son-in-law, a licensed CA attorney, was let go by a company in CA, where he worked as a Corporate Lawyer, when they moved their HQ to TX and their plant to a Maquiladora in Old Mexico, just across the border. He fought his dismissal and his former employer settled out of court, quite handsomely I might add. Regardless, the guy was not a keeper, not as a husband for my daughter, nor as a son-in-law, and not as a Corporate Lawyer either which is why they did not invite him to move to the TX HQ, but fired his @ss instead. But he was wrongly terminated, and his former employer knew this but didn't think he would fight it.

  • MaintenanceCosts "But your author does wonder what the maintenance routine is going to be like on an Italian-German supercar that plays host to a high-revving engine, battery pack, and several electric motors."Probably not much different from the maintenance routine of any other Italian-German supercar with a high-revving engine.
  • 28-Cars-Later "The unions" need to not be the UAW and maybe there's a shot. Maybe.
  • 2manyvettes I had a Cougar of similar vintage that I bought from my late mother in law. It did not suffer the issues mentioned in this article, but being a Minnesota car it did have some weird issues, like a rusted brake line.(!) I do not remember the mileage of the vehicle, but it left my driveway when the transmission started making unwelcome noises. I traded it for a much newer Ford Fusion that served my daughter well until she finished college.
  • TheEndlessEnigma Couple of questions: 1) who will be the service partner for these when Rivian goes Tits Up? 2) What happens with software/operating system support when Rivia goes Tits Up? 3) What happens to the lease when Rivian goes Tits up?
  • Richard I loved these cars, I was blessed to own three. My first a red beauty 86. My second was an 87, 2+2, with digital everything. My third an 87, it had been ridden pretty hard when I got it but it served me well for several years. The first two I loved so much. Unfortunately they had fuel injection issue causing them to basically burst into flames. My son was with me at 10 years old when first one went up. I'm holding no grudges. Nissan gave me 1600$ for first one after jumping thru hoops for 3 years. I didn't bother trying with the second. Just wondering if anyone else had similar experience. I still love those cars.
Next