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

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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.

  • MaintenanceCosts It's not a Benz or a Jag / it's a 5-0 with a rag /And I don't wanna brag / but I could never be stag
  • 3-On-The-Tree Son has a 2016 Mustang GT 5.0 and I have a 2009 C6 Corvette LS3 6spd. And on paper they are pretty close.
  • 3-On-The-Tree Same as the Land Cruiser, emissions. I have a 1985 FJ60 Land Cruiser and it’s a beast off-roading.
  • CanadaCraig I would like for this anniversary special to be a bare-bones Plain-Jane model offered in Dynasty Green and Vintage Burgundy.
  • ToolGuy Ford is good at drifting all right... 😉
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