UAW members on strike outside a GM plant in Flint Michigan on Sept. 16th, 2019.
Michael Wayland | CNBC
DETROIT – A 40-day strike by the United Auto Workers union against General Motors cost the automaker about $3.8 billion for the year and $1 billion for the third quarter, higher than some Wall Street analysts had estimated.
The strike lasted from Sept. 16 until Friday, when a majority of the union’s 48,000 members approved a new four-year deal. It was the longest national walkout against the automaker since a 67-day strike in 1970.
After accounting for the impact of taxes and interest, the strike shaved $2.9 billion off the company’s bottom line for the year, roughly $700 million of that in the third quarter, and prompted GM to lower its earnings guidance for the year.
The cost was higher than some Wall Street estimates that placed it at more than $2 billion in lost vehicle production during the third and fourth quarters. The high end of estimates pegged it at closer to $100 million in losses per day.
The strike’s impact was far-reaching, causing GM plants in Canada and Mexico to temporarily shutter due to a lack of parts to produce vehicles. It also significantly impacted suppliers of GM, many of whom confirmed temporary layoffs and undisclosed financial losses.
While most of GM’s major suppliers have not reported third-quarter earnings, executives with Lear Corp. on Friday said each week of the strike cost the Southfield, Michigan-based supplier between $50 million and $75 million a week.
Lear, while discussing third-quarter results with analysts, cited the strike as the primary reason for lowering its earnings forecast for the year. The revised forecast included adjusted net income of between $765 million and $845 million, down from between $885 million and $965 million on lower sales of between $19 billion and $19.5 billion, down from $19.8 billion to $20.3 billion.
