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

Steph Willems
by Steph Willems
gms strike tab now at 1 billion j p morgan claims

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]

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  • Akear Akear on Oct 02, 2019

    100 days.

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    • 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.

  • Wjtinfwb Over the years I've owned 3, one LH (a Concorde) a Gen 1 300 and a Gen 2 300C "John Varvatos". The Concorde was a very nice car for the time with immense room inside and decent power from the DOHC 3.5L. But quality was awful, it spent more time in the shop than the driveway. It gave way to a Gen 1 300, OK but the V6 was underwhelming in this car compared to the Concorde but did it's job. The Gen 1's letdown was the awful interior with acres of plastic, leather that did it's best imitation of vinyl and a featureless dashboard that looked lifted from a cheaper car. My last one was a '14 300C John Varvatos with the Pentastar. Great car, sufficient power and exceptional highway mileage. The interior was much better than the original as well. It was felled by a defective instrument cluster that took over 90 days to fix and was ultimately lemon law' d back to FCA. I'd love one of the 392 powered final edition 300s but understand they're already sold out and if I had an extra 60k available, would likely choose a CPO BMW 540i for comparable money.
  • Dukeisduke Thanks Cary. Folks need to make sure they buy the correct antifreeze, since there are so many OEM-specific ones out there nowadays (Dex-Cool, Ford gold, Toyota red and pink, etc.).And sorry to hear about your family situation - my wife and I have been dealing with her 88-yo mom, moving her into independent senior living, selling her house, etc. It's a lot to deal with.
  • FreedMike Always lusted after that first-gen 300 - particularly the "Heritage Edition," which had special 300 badging and a translucent plastic steering wheel (ala the '50s and '60s "letter cars").
  • Dave M. Although the effective takeover by Daimler is pooped upon, this is one they got right. I wasn't a fan of the LHs, mostly due to reported mechanical, NVH and build quality issues, but I though Chrysler hit it out of the park with the LXs. The other hyped release that year was the Ford Five Hundred, which, while a well-built car with superior interior space, couldn't hold a candle to the 300.
  • Art Vandelay I always liked those last FWD 300's. Been ages since I've seen one on the road though. Lots of time in the RWD ones as rentals. No complaints whatsoever.