(New York) The UAW automobile union reacted promptly after General Motors’ announcement on Tuesday of quarterly results above expectations, and extended the strike launched in mid-September to a major site of the American manufacturer.
“Another record quarter, another record year. As we have been saying for months: record profits lead to record contracts,” commented Shawn Fain, president of the UAW, quoted in a press release.
The 5,000 members of the United Auto Workers union working at the GM plant in Arlington, Texas – described by the union as “the largest and most lucrative of the group – were called to walk out.
The manufacturer said it was “disappointed by the escalation of this unnecessary and irresponsible strike.”
The announcement came hours after GM reported better-than-expected third-quarter results with net income of $3.06 billion (-7.3%) and revenue of $44.13 billion. dollars (5.4%).
Net earnings per share excluding exceptional items, a benchmark for the markets, stood at $2.28 in the third quarter when the consensus was for $1.87.
The social movement – launched at GM, Ford and Stellantis – weighed $200 million on its third-quarter operating profit, Chief Financial Officer Paul Jacobson told reporters.
This is the first time that the “Big Three”, the three historic American manufacturers, have been targeted at the same time. More than 45,000 of the UAW’s 146,000 employees are now on strike.
Referring to an estimate made on Sunday evening, the impact on fourth-quarter operating income is at this stage around $600 million, added Mr. Jacobson, specifying that the group was assessing the consequences on its results at “about $200 million a week.”
But because of the uncertainties linked to this strike, GM decided to “withdraw” its forecasts for the whole year.
“The underlying fundamentals of our business were strong and pushing us towards the high end of our range” before the strike, Mr. Jacobson noted. “We remain optimistic that we are able to reach an agreement as quickly as possible.”
“We need to be sure that this will be a deal that allows us to be competitive in the long term. The results are solid at the moment, but there is a lot of uncertainty in the future with the electric vehicle,” he insisted.
Group boss Mary Barra said in a letter to shareholders accompanying the earnings release that GM’s latest offer was “the largest ever to the UAW” and would allow the majority of employees to gain about 84 000 dollars per year or more at the end of the four-year collective agreement.
In its response to the Arlington work stoppage, GM said the offer had “increased the already substantial and historic offers by approximately 25 percent.”
In the third quarter, margins were squeezed by the impact of the strike and by warranty repair costs that rose due to inflation, Mr. Jacobson said.
“We were profitable in all regions, including China,” said Mary Barra.
The group sold 1.62 million vehicles worldwide in the third quarter, including 796,000 in North America (15.8% market share).
On the product side, Mary Barra announced the release until 2024 of a new range of SUVs that are “much more profitable” than old models.
The financial director, on the other hand, confirmed the slowdown in the production of electric vehicles “to protect our pricing, to adapt to lower growth in demand and to implement modifications which will boost our results”.
GM announced on October 17 that it was postponing, for these reasons, until the end of 2025, the commissioning of a production line at a Michigan factory, which must be reconverted to manufacture electric pickups.
This one-year delay should allow it to save a billion dollars in capital in 2024.
“We face a lot of uncertainty in the short term,” noted Ms. Barra during a conference with analysts. “The transition to electric vehicles will have its ups and downs,” she warned.
But the group’s objective remains to produce one million electric vehicles in North America in 2025, assured Mr. Jacobson.
For Shoggi Ezeizat, analyst at GlobalData, these electric sales “remain dull”, which is all the more “worrying” as GM will stop production of the Bolt at the end of the year “on which it is very dependent”. .
Around 12 p.m. (Eastern time), GM shares fell 0.44% to $29.09 on the New York Stock Exchange.
