General Motors CEO Mary Barra has discussed the ongoing UAW strikes affecting the Detroit Three in a Tuesday letter to shareholders about the automaker’s third quarter 2023 financial results as the country withdrew a buoyant full year forecast.
Last night, the UAW also struck GM’s Arlington, Texas factory which produces some of the company’s profitable pickup trucks and large SUVs in conjunction with a Mexican plant.
“Regarding the ongoing strikes at some of our US facilities: I know many of you are concerned about the impact of higher labour costs on our business in the United States,” Barra wrote.
“Let me address this head on. “It’s been clear coming out of COVID that wages and benefits across the US economy would need to increase because of inflation and other factors.
“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.
“Since negotiations started this summer, we’ve been available to bargain 24/7 on behalf of our represented team members and our company. 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.
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“It’s an offer that rewards our team members but does not put our company and their jobs at risk. Accepting unsustainably high costs would put our future and GM team member jobs at risk, and jeopardising our future is something I will not do.”
According to Bloomberg, GM said yesterday it could no longer say if it would make up to US$14bn in profit this year because the UAW strike, now in its sixth week, had made the company’s financial future too difficult to predict.
The carmaker withdrew that forecast though it did report better than expected Q3 results, Bloomberg said. GM made an adjusted profit of $2.28 a share, beating Wall Street analysts’ estimates of $1.84, thanks to growth in its North American business and historically high vehicle pricing. Revenue was $44.1bn, almost $1bn more than the analysts had forecast.
Bloomberg said the results showed how much pressure the strike had put on the US industry, casting a shadow over an otherwise strong year in which GM had gained market share. It beat Q3 estimates despite losing $200m from the walkout during the reporting period.
GM reportedly said strike costs had so far reached about $800m and it expected about $200m a week in additional work stoppage related costs going forward.
“We’re not going to sign a deal [with the UAW] that doesn’t allow us to be competitive,” GM chief financial officer Paul Jacobson said in an interview with Bloomberg Television.
“Clearly, given the industry’s changing pricing and demand outlook and higher labour costs, we have work to do to ensure we achieve low to mid-single-digit EBIT EV margin targets in 2025, and grow our revenue and sustain strong 8-10% EBIT margins in North America, Barra wrote in her shareholders letter.
“The work has already begun and I’m confident we will achieve our targets and grow from there.”
Barra added: “Our supply chain team and logistics partners in North America have done great work improving the flow of vehicles from our assembly plants to our dealers. Our US dealers helped us outperform the market with strong pricing and essentially flat incentives.
“We were profitable in every region, including China. And GM International excluding China is on track to deliver significantly higher EBIT-adjusted in 2023 compared to a year ago.”