General Motors said it has lost $800 million in operating profits since the United Auto Workers (UAW) union strike began some 40 days ago, leading the automaker to withdraw its full-year earnings guidance and say it’s being forced to slow down its electric vehicle strategy.
GM Chief Financial Officer Paul Jacobson revealed the financial hit on a call with reporters on Oct. 24, adding that the company estimates it will keep losing roughly $200 million a week if the strike continues in its current scope.
If the union decides to expand its strike to other GM facilities, those losses could climb, he warned.
Several hours after Mr. Jacobson discussed the company’s financial performance amid the strikes, the UAW expanded its strike to include another GM production facility.
Union leadership said in a statement that “it is clear that GM can afford a record contract.”
Currently, GM’s offer is for a 23 percent wage increase over a four-and-a-half year contract, while the UAW is pushing for something closer to 35 percent.
On the same call with reporters, GM CEO Mary Barra said that GM’s current contract offer is a record and that the company refuses to overstretch itself.
“We will not agree to a contract that isn’t responsible to our employees and our shareholders,” she said.
EV Push ‘Moderating’
GM’s earnings numbers showed that the company’s third-quarter net income fell 7.3 percent, to $3.06 billion, while overall revenues rose 5.4 percent, to $44.1 billion.The automaker’s operating profit for the third quarter was $3.56 billion, down 16.9 percent from the same quarter last year.
On the call, Mr. Jacobson said that, despite GM’s “strong underlying business fundamentals,” the uncertainty caused by the strike was leading the automaker to withdraw its 2023 full-year guidance.
While he stressed that GM’s commitment to increased electric vehicle (EV) production remains “as strong as ever,” he said the company is slowing its electrification strategy.
GM is “moderating the acceleration of EV production to protect our pricing, adjust to slower near-term growth in demand and implement engineering changes that will bolster profits,” he said.
Once a deal with the union has been reached on a new contract, there would be an update on the financial guidance for the year, as well as a more complete reckoning of the costs of the strike, Mr. Jacobsen said.
Ms. Barra said that GM would be pulling back on EV product spending and is slowing the launch of several EV models to cut costs.
Not long after GM posted its third-quarter results, the UAW announced that an additional 5,000 union workers were walking off the job at GM’s largest plant and biggest moneymaker in Arlington, Texas.
That’s where large SUVs like the Cadillac Escalade and the Chevrolet Suburban are made.
Strike Expands
A day before GM posted its third-quarter earnings and the UAW decided to stage a walkout at the Arlington facility, the union expanded its strike to a Stellantis pickup truck facility in Michigan.Roughly 6,800 UAW members at the Sterling Heights Assembly Plant joined the strike, halting production at the automaker’s plant that makes the RAM 1500 trucks.
The union said that Stellantis “lags behind both Ford and General Motors in addressing the demands of their UAW workforce.”
“Currently, Stellantis has the worst proposal on the table regarding wage progression, temporary worker pay and conversion to full-time, cost-of-living adjustments (COLA), and more,” the union leadership said in a statement.
In recent days, Mr. Fain confirmed that General Motors and Stellantis have presented wage offers that matched Ford’s 23 percent increase over a four-year contract.
That’s not enough, in Mr. Fain’s view, and the automakers should raise their offers.
“We’ve got cards left to play, and they’ve got money left to spend,” Mr. Fain said in a statement.
When the UAW launched its strike in September, the union sought a more than 40 percent wage increase over four years, restoration of the defined-benefit pension plan, and a 32-hour work week with 40-hour pay.
Since then, the UAW leadership has trimmed its demand to 36 percent during the life of the contract, with media speculation suggesting that the union has since reduced its demands, though it’s unclear where talks stand.
The three automakers told The Epoch Times in emailed statements that they want to reach deals that balance the concerns of employees and the company’s respective visions for the future, which includes an industry-wide shift to electric models that have fewer parts and require less labor.
