It backed down from plans for electric cars.. The workers’ strike expands, costing General Motors $800 million
General Motors revealed that the strike by UAW workers in the United States has cost it about $200 million per week, an estimate that is expected to rise after 5,000 union members withdrew from one of its largest and most profitable factories on Tuesday.
The union announced the strike more than 5 weeks ago, against the managements of General Motors, Ford, and Stellantis, targeting an increasing number of factories and spare parts warehouses, according to the Financial Times.
The costs of the confrontation with General Motors became clearer on Tuesday, as the Detroit automaker announced its financial results for the third quarter, noting that the strike has so far cost $800 million in operating profits.
Last July, the company expected that it would achieve an adjusted operating income of between $12 and $14 billion this year.
But hours later, the union federation announced that workers had stopped production at the General Motors assembly plant in Arlington, Texas, which manufactures the Chevrolet Suburban and Cadillac Escalade, noting that the plant is the largest source of money for the company, which said in a statement that it was “disappointed.” “Hope about the escalation of this unnecessary and irresponsible strike.”
It should be noted that more than 45,000 union members out of 146,000 in the three Detroit companies are now on strike to demand increased wages and an increase in job security as the United States turns to electric cars.
The Federation of Trade Unions gradually expanded the scope of its strikes from one factory to another in order to strengthen its influence at the negotiating table. With the new strike at GM’s Texas site, the highly profitable SUV or truck plants at all three Detroit automakers have so far been closed.
It is noteworthy that the previous strike carried out by the Federation of Trade Unions against General Motors in 2019 lasted for 6 weeks and affected all of the company’s operations, costing it a loss of profits worth $3.6 billion.
General Motors reported on Tuesday that during the third quarter, adjusted earnings reached $3.6 billion before interest and taxes. This represents a decline of approximately 17% from last year, but still exceeds Wall Street expectations of 3.3 billion.
Revenues increased 5% compared to the same period of the previous year, reaching $44 billion, but General Motors’ adjusted operating profit margin decreased from 10.2% to 8.1%.
The company explained that the margin decrease came partly from the strike, as well as higher insurance costs. While fewer owners were filing warranty claims, the cost of repair rose due to inflation.
General Motors also backed away from ambitious goals for manufacturing electric cars. It said on Tuesday that it no longer plans to manufacture 400,000 electric cars by the middle of next year, although it still aims to reach one million electric cars annually by the end of 2025.
2023-10-24 19:47:42
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