The United Auto Workers union stepped up pressure on General Motors on Tuesday as 5,000 more workers walked off their jobs at a highly profitable SUV factory in Arlington, Texas.
The move comes just a day after the union began a strike at a Stellantis factory in Sterling Heights, Michigan, north of Detroit, that turns Ram pickups into a cash cow for the company.
Even before the recent strikes, the strike against the “Big Three” Detroit automakers was costing General Motors about $200 million a week in lost profits, the company revealed in its most recent quarterly results.
UAW President Shawn Fain last week threatened more strikes to force GM, Ford and Stellantis to increase their pay offers.
However, GM CEO Mary Barra said on the earnings call Tuesday morning that the company has already made a record offer and will not agree to any contract that jeopardizes the company’s future.
GM CEO Mary Barra said on Tuesday morning’s earnings call that the company had already made a record offer
UAW President Shawn Fain last week threatened more strikes to force GM, Ford and Stellantis to increase their pay offers
GM reported net income of $3.1 billion for the quarter ended last month, down 7 percent from a year earlier, due to lost production due to the strike as well as increased warranty costs, the company said.
The company also withdrew its previous profit forecast for 2023, citing uncertainty over the length of the strike and how many factories would ultimately close.
The UAW strike, which began on September 15, adopted a gradual strategy, targeting a handful of factories and expanding strike locations over time without an agreement.
GM said the strikes had cost $200 million through the end of September and another $600 million so far this month, with ongoing profit losses estimated at $200 million a week based on the plants currently closed.
Despite the strike disruptions, GM said it earned $2.28 per share excluding one-time items, significantly beating Wall Street estimates of $1.87. The company’s shares rose more than 1 percent premarket.
According to data provider FactSet, GM’s sales of $44.13 billion rose 5.4 percent from a year ago, also exceeding analyst estimates of $42.48 billion.
In addition to GM, the UAW’s strikes also target automakers Ford and Stellantis, as well as the maker of Dodge, Jeep and Ram.
On Monday, another 6,800 union members walked out of a Stellantis plant in Sterling Heights, Michigan, where Ram pickups are a huge profit center for the company.
The strike that began Tuesday against GM’s Texas plant is aimed at a factory that makes large truck-based SUVs, which are among the company’s most profitable vehicles. These include the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade.
After the Arlington strike was announced, GM expressed disappointment at the escalation, calling the strike “unnecessary and irresponsible.”
The company said the strike was harming employees and would have a “negative impact on our dealers, suppliers and the communities that rely on us.”
GM shares have fallen more than 10 percent over the past month but rose slightly on Tuesday
UAW members walk out as they launch a new strike against a highly profitable GM plant in Arlington, Texas, that makes SUVs such as the Chevrolet Tahoe, GMC Yukon and Cadillac Escalade
The General Motors headquarters at the Renaissance Center in Detroit can be seen from Hart Plaza
United Auto Workers President Shawn Fain (left) listens as President Joe Biden speaks to striking UAW members outside a General Motors plant last month
UAW chief Fain linked the new strike to GM’s financial results, saying in a prepared statement that GM exceeded Wall Street’s expectations and that its offer fell short of Ford’s.
“It’s time for GM workers and the entire working class to get their fair share,” Fain said.
Barra said GM’s record offer rewards employees but does not threaten the company or the UAW’s jobs.
“Accepting unsustainably high costs would jeopardize our future and the jobs of our GM team members, and putting our future at risk is something I will not do,” she said in a statement.
About 46,000 workers are currently on strike against all three automakers, or about 32 percent of the Detroit Three’s 146,000 union members.
The strikes, now in their sixth week, affect seven assembly plants and 38 parts warehouses of the three companies.
The union is demanding a 36 percent wage increase over four years, a four-day week and further improvements to compensation and benefit plans.
In previous strikes, the union had targeted a particular company and reached an agreement that served as a model for an agreement with the other two. This time, however, she is taking a different approach and striking all three companies at the same time.
So far, GM’s sales and prices in North America have remained stable despite the strike.
Average selling prices for GM vehicles were $50,750 last quarter, down only slightly from the previous quarter, said GM Chief Financial Officer Paul Jacobson.
“So far, the consumer has done remarkably well for us, as evidenced by average transaction prices,” Jacobson said. “They continue to persevere and, in my opinion, have exceeded most of the expectations that were set at the beginning of the year.”
Jacobson said GM executives were concerned about rising interest rates as well as the conflict in the Middle East and whether that could affect consumer behavior.
However, he did not share Tesla CEO Elon Musk’s pessimism about the impact of rising interest rates on consumer demand.
Jessica Caldwell, head of insights for auto site Edmunds.com, said GM’s sales numbers looked good on the surface, but that could change in the next few months.
When cold weather arrives, market participants are typically looking for larger, four-wheel drive vehicles.
But she said a prolonged strike could close plants, cut production of these lucrative vehicles and “harbinger sales declines in a key part of the coming calendar.”