US GM Loses $200 Million Due to Auto Union Strike

General Motors (GM) in the United States has reportedly suffered losses exceeding 270 billion won due to the impact of the automobile union strike. As the strike expands and prolongs, the cost of the strike is expected to increase further.

According to Bloomberg on the 4th (local time), the United Auto Workers (UAW) union is striking against the US Big Three?GM, Ford, and Stellantis?and it has been estimated that GM's losses reached at least $200 million (approximately 270 billion won) just two weeks after the strike began.

This loss estimate is based on the decreased sales of pickup trucks at the Missouri production plant, where the strike is currently ongoing. According to GM, since the strike began on the 15th of last month, sales of two popular pickup truck models, the Chevrolet Colorado and GMC Canyon, have decreased by at least 10%.

As the union expands the strike locations, the performance impact due to work stoppages is expected to worsen. On the 29th of last month, UAW announced that two additional plants?the GM plant in Michigan and the Ford plant in Chicago?would join the strike. The newly added GM Michigan plant produces popular sport utility vehicles (SUVs) such as the Chevrolet Traverse and Buick Enclave.

[Image source=Reuters Yonhap News]

Additionally, GM announced that it has set up a credit facility increasing the liquidity limit available without separate review to $6 billion. This measure is analyzed as a response to concerns that the prolonged strike could lead to liquidity deterioration.

Bloomberg reported, "This is interpreted as a preparation for a situation where external financing might become difficult due to the aftereffects of the prolonged strike." As of the end of June, GM's cash and cash equivalents stood at $38.9 billion. Bloomberg assessed, "The risk of operational funds running out soon due to the strike impact is very low."

The impact of the strike continues to weigh on GM's stock price. GM shares listed on the New York Stock Exchange (NYSE) closed at $31.04, down 1.08% from the previous session. Since the strike began on the 15th of last month, GM's stock price has fallen by more than 8%. The year-to-date decline in stock price amounts to 28% compared to the February peak of $43.17.

Meanwhile, with the positions of both UAW and the Big Three companies running parallel, no breakthrough has been found to end the strike through negotiations. Due to the expansion of the strike front, the total number of UAW members participating in the strike among the Big Three has increased to 25,000 (17%). UAW has demanded at least a 40% wage increase over the next four years and job security for electric vehicle production workers, while the management insists on a 20% increase.

Other sticking points in the negotiations include strengthening pension and medical benefits for union members, expanding paid leave days including a four-day workweek, limiting temporary employee hiring, and preserving jobs during the transition to electric vehicles. Automotive analysis firm S&P Global Mobility has estimated that the daily vehicle production loss due to the UAW strike is about 3,200 units.