General Motors' earnings were diminished by strikes during an otherwise successful quarter. Further losses are possible if picketing escalates.
The automaker's chief financial officer, Paul Jacobson, indicated that the company's pretax profits will be reduced by $800 million this year due to a strike by auto workers and an additional $200 million every week after that.
Those numbers just account for the facilities that are now on strike, which employ less than a third of the company's staff. So, if the United Auto Workers (UAW) union adds other sites, the losses would mount much higher, CFO Jacobson told reporters.
Strike Having Its Impact
The UAW showed this week that risks to such money-making operations might mount as the strike continues.
On Tuesday, October 24, GM reported net income of almost $3 billion for the period of July through September, down 7% year over year owing to production losses from the strike and higher warranty expenses, as reported by AP News. Since it was unclear how long the strike would go and how many plants would be closed, the business also retracted its earlier pretax profit predictions for the whole year.
Despite this, GM reported earnings of $2.28 per share, much above the $1.87 expected by Wall Street. FactSet reports that the company's revenue of $44.13 billion is 5.4% higher than the projections of $42.48 billion.
The UAW has been on strike against GM and other Detroit-based rivals, Ford and Stellantis, for about six weeks now. The union has avoided striking at plants that produce pickup trucks and big SUVs, which are GM's most lucrative cars.
Stellantis' massive Sterling Heights, Michigan facility, where they produce Ram pickup trucks, was closed by the union on Monday, October 23. Ford's biggest and most profitable facility, which produces trucks and large SUVs, is located in Louisville, Kentucky, and its employees went on strike two weeks ago. There are now only 28% on strike out of a total union membership of 146,000 at the Detroit Three.
Jacobson estimated a $200 million loss due to walkouts in the last two weeks of the third quarter. From October through December, he anticipated more losses of $600 million.
'Record Offer' to Union Workers
GM CEO Mary Barra said in a letter to shareholders that the company has made a "record offer" to the union, which would increase top factory pay to $40.39 per hour, or nearly $84,000 per year, within four years. She said that the offer was getting close to the maximum amount the corporation would pay.
"It's an offer that rewards our team members but does not put our company and their jobs at risk. Accepting unsustainably high costs would put our future and GM team member jobs at risk, and jeopardizing our future is something I will not do," Barra stated.
