GM says UAW strike has cost it $800M so far

DETROIT — General Motors Co. (GM) said Oct. 23 the cost of the ongoing United Auto Workers (UAW) strike is $800 million so far and increasing by $200 million for every week it continues.

The Detroit-based auto maker also withdrew its 2023 financial guidance and its electric vehicle production targets through mid-2024 as it reported that third-quarter net income declined 7.3% to $3.1 billion.

GM said adjusted earnings before interest and taxes fell 17% in the third quarter to $3.6 billion, including a $200 million reduction attributed to the strike that began Sept. 15. Production lost so far in the fourth quarter amounts to $600 million, CFO Paul Jacobson told reporters.

Global revenue rose 5.4% in the quarter ended Sept. 30 to $44.1 billion, and net profit margins fell to 6.9% from 7.9% a year earlier.

GM earned $3.5 billion in North America before interest and taxes, down 9.5%, and its adjusted margin for the region fell to 9.8%, from 11.2% a year ago.

“Our supply chain team and logistics partners in North America have done great work improving the flow of vehicles from our assembly plants to our dealers,” CEO Mary Barra said in a letter to shareholders. “Our U.S. dealers helped us outperform the market with strong pricing and essentially flat incentives. We were profitable in every region, including China.”

The automaker withdrew its guidance for the full year, citing uncertainty from the strike, which is now in its sixth week. GM in July had raised its 2023 guidance to net income of $9.3 billion to $10.7 billion and adjusted EBIT of $12 billion to $14 billion.

GM said its EV production plans also have become more uncertain, though not because of the strike. The company is no longer saying it expects to build a total of 400,000 EVs in North America by mid-2024 "just to make sure that we're balancing production to demand," Jacobson said.

However, GM said it still expects to have the capacity to build 1 million EVs in North America by the end of 2025.

GM last week said it would delay starting production of electric Chevrolet Silverado and GMC Sierra full-size pickups at its Orion Assembly plant in Oakland County until late 2025. It said that move was unrelated to the strike and cited the need "to better manage capital investment while aligning with evolving EV demand," along with updated engineering that is expected to help with profitability.

"The decision to push out and defer Orion by a year will actually allow us to incorporate some of the changes and improvements that we've seen in early-stage production that will ultimately help the margins of the vehicle" at scale, Jacobson told reporters.

GM continues to target low- to mid-single-digit EV margins in 2025, he said. It's scaling up production of EVs and has made progress alleviating battery module supply constraints, Jacobson said.

None of GM's EV plants have been shut down by the UAW's strike. Workers are picketing at assembly plants in Lansing and Wentzville, Mo., that build the Chevrolet Colorado and Traverse, GMC Canyon and Buick Enclave, as well as 18 parts distribution centers. More than 2,300 workers at other GM facilities have been laid off temporarily because of a lack of parts, including an assembly plant in Kansas that builds the Chevrolet Malibu and Cadillac XT4.

In early October, GM obtained a $6 billion line of credit to ensure flexibility in operations during the strike.

The UAW's 40-day strike in 2019 cost GM $3.6 billion, but it involved more plants and workers than the current walkouts that have targeted certain Detroit 3 plants while other facilities remain in operation.