The General Motors strike is getting more expensive. It has likely cost the automaker more than $1 billion already.
- General Motors workers have been striking since September 15 as their union negotiates a new contract.
- That work stoppage is costing GM as the third quarter ends, and is only getting more expensive by the day.
- JPMorgan estimates the automaker has already taken a $1 billion hit.
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As the stalemate between General Motors and its employees represented by the United Auto Workers union drags through its third straight week, it's eating into even more of the automakers' balance sheet.According to estimates from Ryan Brinkman, an analyst at JPMorgan, the strike had already cost GM more than $1 billion as of Monday morning, and is only getting more expensive.Advertisement
"We estimate General Motors produced roughly ~2.0 million vehicles in its US factories last year (roughly 38,500 per week), and ~3.0 mn when additionally considering its factories in Canada and Mexico (roughly 57,500 per week in total)," Brinkman said.The end of the third quarter in the midst of the strike is a silver lining, Brinkman says.Advertisement
"GM likely has some ability to recover a portion of these lost profits by shifting production from 3Q into 4Q," Brinkman said. "Although the automaker will also likely be limited in its ability to add production for vehicles already in high demand or in launch mode (such as its high profit full-size "heavy duty" pickup trucks)."
The Union's director said Tuesday that the UAW and GM were still in talks. A GM proposal "did not satisfy your contract demands or needs," the statement reads.In response, GM said "we continue to negotiate and exchange proposals, and remain committed to reaching an agreement that builds a stronger future for our employees and our company."Advertisement
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