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GM's US$2b blow from strike also hits union workers' wallets
[DETROIT] General Motors Co has missed out on about US$2 billion of earnings as a result of the United Auto Workers walkout, which will cost striking workers about US$2,000 of profit sharing, analysts at Bank of America Merrill Lynch estimated.
With plants across the US idled and shutdowns spilling over into Mexico and Canada, the automaker is losing about US$100 million a day in earnings before interest and taxes, John Murphy, a BofA analyst who recommends buying GM shares, wrote in a research report Tuesday. UAW members have probably forgone about US$2,000 of profit-sharing and as much as US$4,000 in net take-home pay.
"A prolonged strike could burn significant cash and bring GM to its knees," Mr Murphy wrote. "But investors likely will also react negatively if management is perceived to have caved into labour's demands and GM's long-term competitiveness is threatened."
A GM spokesman declined to comment on the report. The automaker's shares fell as much as 0.9 per cent shortly after the start of regular trading Tuesday.
The two sides appear to be getting close to a deal. Late Monday, the union called its local presidents and chairmen to Detroit for a meeting on Oct 17. While GM and the UAW don't have a tentative agreement yet, union leaders typically call-in their local leaders when there's a deal or they are close to getting one.
The UAW has been striking over higher wages for entry-level workers, a path to full-time employment for temporary workers and job security.