General Motors yanked its guidance for 2023 on Tuesday as costs related to the UAW strike are costing the company $200 million every week, the automaker announced.
GM said its third-quarter net income fell 7.3% to $3.06 billion, forcing the company to retract its profit outlook of $12 billion to $14 billion.
To manage further costs related to the strike, the automaker also said it will abandon its goal to produce 400,000 EVs between 2022 and mid-2024.
Mary Barra, CEO of General Motors, attends the annual Allen and Co. Sun Valley media conference in Sun Valley, Idaho. (REUTERS/Brendan McDermid / Reuters Photos)
"I know many of you are concerned about the impact of higher labor costs on our business in the United States," General Motors CEO Mary Barra said in a letter to shareholders. "The current offer is the most significant that GM has ever proposed to the UAW, and the majority of our workforce will make $40.39 per hour, or roughly $84,000 a year by the end of this agreement’s term."
The latest data from Michigan consulting firm Anderson Economic Group show the union's strike against Detroit's Big Three has cost the auto industry alone some $9.3 billion as of Oct. 19, which marked the strike's fifth full week.
"They’ve demanded a record contract — and that’s exactly what we’ve offered for weeks now: a historic contract with record wage increases, record job security and world-class healthcare," Barra added. "Accepting unsustainably high costs would put our future and GM team member jobs at risk, and jeopardizing our future is something I will not do."
Workers picket outside of the Ford Assembly plant as the UAW strike against the Big Three U.S. automakers continues on October 10, 2023 in Chicago, Illinois. The strike, which started on Sept. 15 at three locations, has now been expanded to 43 facili (Scott Olson/Getty Images / Getty Images)
Despite the work stoppage and an estimated $800 million loss since the strike began last month, GM beat third quarter estimates on a 5.4% pop in revenue to $44.1 billion. Adjusted earnings per share also beat Wall Street’s expectations at $2.28, up from the $2.25 in 2022.
GM secured a $6 billion line of credit on Oct. 4, just two days after cutting 164 more jobs due to the ongoing strike.
In a filing with the Securities and Exchange Commission (SEC), GM said it entered into a 364-Day Revolving Credit Agreement with JPMorgan Chase to secure the line.
United Auto Workers (UAW) members and supporters on a picket line outside the Stellantis NV Toledo Assembly Complex in Toldeo, Ohio, US, on Friday, Sept. 22, 2023. The United Auto Workers said more of its members will go on strike at General Motors C (Emily Elconin/Bloomberg via Getty Images / Getty Images)
The UAW launched its strike against GM, Ford and Stellantis on Sept. 15, starting with one major assembly plant at each manufacturer. The union has gradually added more strike targets as contract negotiations continue without any agreements in place.
FOX Business’ Breck Dumas contributed to this report.