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, significantly higher than previously estimated by Wall Street.
After accounting for interest and taxes, the strike shaved off about $2.9 billion in net income, from the automaker’s 2019 earnings, or $2 a share, the company said Tuesday in releasing its third-quarter earnings before the markets opened. That includes $700 million in costs, or 52 cents per share, for the third-quarter alone.
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.
Wall Street analysts estimated the strike cost GM more than $2 billion in lost vehicle production during the third and fourth quarters. Estimates ranged from around $50 million 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.