GM News: GM Lost $2.9 Billion on Strike

[Drew Dowdell]

General Motors' lost $2.9 billion in profit due to the strike according to the company's Q3 earnings report released Tuesday.  That number exceeded analyst estimates by $900 million. In the final two weeks of the strike, as further plants had to be shut down due to parts shortages, the company lost $750 million.  The total loss is about $2.00 per share. The stock is up 4.71 percent over Monday's close at the time of this writing.

The strike hit 31 factories and 21 other facilities including plants in Canada and Mexico which build the Chevrolet Equinox and Chevrolet Blazer respectively. Both plants were forced to shut down due to parts shortages caused by striking workers in the U.S.

 

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[David]

GM lost on this battle and the UAW will hit Ford and FCA equally hard and we will be left with higher auto prices.

[ccap41]

Ford and FCA don't have the profit numbers GM does so they might be able to skate by a little easier. 

[USA-1]

GM did alright with the contract, but definitely gave more than they wanted. They should have split the difference on healthcare cost %, but got what they wanted in other areas. Glad they're keeping the 4.1 Mil. sq. ft. D-HAM plant open and investing for BEV trucks and SUV's since the Volt, Impala, LaCrosse and XTS are all out and the CT6 production will most likely remain there since it's thankfully staying around and it's already being built there.

It was a 60% yeh to 40% neh vote to approve, so there's still thousands of greedy UAW workers that aren't happy with the deal...no surprise.

[balthazar]

I question how these estimates are computed.

[riviera74]

1 hour ago, balthazar said:

I question how these estimates are computed.

$3 Billion is nothing to sneeze at.  Then again, the UAW seems to want to get broken sooner than later.  That strike was really costly and GM will need to somehow make this up.  That means fewer USA factories opened in the long run.

[smk4565]

One day GM will build all of their vehicles in China, probably just after the UAW negotiates a $200 per hour deal for the last remaining 87 members.

[balthazar]

2 hours ago, riviera74 said:

$3 Billion is nothing to sneeze at.

Of course not. But how much did it actually cost?

Recall the Benghazi committee hearings, how they cost $8 million or whatever the number was?
Know how that number was computed? They took the time each rep spend on the committee, then extrapolated their salary to that time, times the number of reps. When you look up the actual accounting of that committee, it was like $1500 for copying & mailing documents. Senators/congresspersons do not get paid anything extra to sit on committees. It's an extrapolation, not a dollar amount.

I suspect a lot of the same here. Vehicle production rates are not static; future production can and will be increased to bring supply back up. 4th quarter results are more 'up in the air' due to the strike than any others. End of fiscal period will tell the bottom line. You cannot lose money you never made. Only the potential to make that money.

[USA-1]

3 hours ago, riviera74 said:

$3 Billion is nothing to sneeze at.  Then again, the UAW seems to want to get broken sooner than later.  That strike was really costly and GM will need to somehow make this up.  That means fewer USA factories opened in the long run.

GM was ready for this and knew they'd have to fight the UAW and had the cash to do so. They had $8.1B in net profit to fall back on and set aside some for operational costs and down time during the strike. I was just talking with a buddy who runs a dealership auto body dept., it was getting really bad with fewer and fewer parts available. It wasn't good for the U.S. economy in general that's for sure. The local economy in Detroit was crushed for 40 days as well.

Now we'll see how FoMoCo and FCA handle their contracts, not as much cash to fight them either. 

[ccap41]

Hey, at least they weren't paying labor costs that whole time! 

10 hours ago, balthazar said:

Of course not. But how much did it actually cost?

My assumption is that it is as exaggerated as much as possible. It is probably the number of sales at transaction prices(meaning not the actual cost to the company). 

I just assume this because news outlets are always pushing something, likely UAW scum pushing the articles to get written. 

[Drew Dowdell]

10 hours ago, balthazar said:

Of course not. But how much did it actually cost?

Recall the Benghazi committee hearings, how they cost $8 million or whatever the number was?
Know how that number was computed? They took the time each rep spend on the committee, then extrapolated their salary to that time, times the number of reps. When you look up the actual accounting of that committee, it was like $1500 for copying & mailing documents. Senators/congresspersons do not get paid anything extra to sit on committees. It's an extrapolation, not a dollar amount.

I suspect a lot of the same here. Vehicle production rates are not static; future production can and will be increased to bring supply back up. 4th quarter results are more 'up in the air' due to the strike than any others. End of fiscal period will tell the bottom line. You cannot lose money you never made. Only the potential to make that money.

It's partially on assumed lost sales due to the lack of inventory.

[riviera74]

At least there is good news on the GM front despite the strike:

https://www.thedetroitbureau.com/2019/10/gm-overcomes-strike-impact-to-beat-analyst-q3-earnings-expectations/

[daves87rs]

GM might have wished they stock piled more cash.....