GM prepares US$6 billion credit line to cushion strike costs
GENERAL Motors is setting up a US$6 billion line of credit to shore up liquidity, a move indicating the carmaker is preparing for a strike at US plants that may drag on with costs already reaching US$200 million.
The Detroit-based company’s move to bolster its financial position was announced in a securities filing early Wednesday (Oct 4). GM wants the 364-day revolving credit line, which will mature on Oct 1 next year, to maintain operational flexibility, a company spokesperson said.
As of June 30, GM’s total automotive liquidity stood at US$38.9 billion, so it’s not at risk of running out of money anytime soon. But the new credit line is a sign GM may be buckling in for a prolonged work stoppage by the United Auto Workers.
The company has been exchanging offers with the UAW, but its facilities have been targeted for escalating union member walk-outs.
The strike shutdown a GM plant in Lansing, Michigan, last week that makes the Chevrolet Traverse and Buick Enclave crossover SUV models and also silenced a Missouri plant on Sept 15 that builds the company’s Chevy Colorado and GMC Canyon mid-size picks.
Sales of those two truck models fell at least 10% in the latest quarter and the spokesperson said the strike has cost GM US$200 million as of last month.
The UAW strike action also is impacting plants operated by GM rivals Ford Motor and Stellantis. BLOOMBERG
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