UAW GOES ON STRIKE “..could dent GM’s profit by between $50 million and $100 million daily” By Todd Horwitz, Bubba Trading.

 

UAW Strike to be Costly for GM

General Motors Co. stands to lose as much as $100 million a day if the nationwide strike of auto workers continues. Auto-industry analysts estimate that the walkout—which began Monday and involves roughly 46,000 full-time workers in more than 30 factories across 10 states—could dent GM’s profit by between $50 million and $100 million daily. Stalled production could slash more than a tenth of GM’s expected third-quarter operating profit of about $3.5 billion by the weekend, though GM could make up some lost production once workers return, analysts say.

The U.S. business is GM’s most profitable, but the strike comes at a delicate time for both the nation’s largest auto maker and the United Auto Workers union. GM is seeking to recover lost market share in the lucrative pickup-truck category, with the continuing rollout of its most extensively redesigned pickups in two decades. The Detroit company is also confronting eroding profit in China, its largest market in terms of sales, and a stalled stock price. GM also has been cutting costs in the U.S. to try to insulate the company from a potential U.S. sales downturn after a long, healthy run.

“It will go on as long as it’s going to take to achieve our bargaining goals,” Chuck Browning, the UAW’s Region 1A Director, told MSNBC. “The bottom line is this company has been extremely profitable for a long period of time. Those profits have been made off the sweat and the hard work of our members, and our members want a fair agreement.”

UAW President Gary Jones and other top union officials are currently under investigation by federal authorities for allegedly embezzling member dues and blowing thousands of dollars on everything from fancy vacations and golf equipment to $400 bottles of Louis Roederer Cristal Champagne.

“I think the union leadership wanted a strike because they’re under attack, and when you feel like you could be losing your grip on power the age-old tactic is to go to war,” Gordon said. And because they need to be seen as taking a hard line against GM management, union negotiators won’t seek a swift solution even though rank-and-file workers will start feeling the financial pain almost immediately.

Workers will get $250-a-week in strike pay, which is far less than the top production pay of $30-an-hour, or $1,200-a-week, he said.

Todd “Bubba” Horwitz

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Financial Markets and Political Commentary
 

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Todd Horwitz - Author of “Average Joe Options“. Todd began his trading career in 1980 at the CBOE. He was one of the original traders in the OEX & helped start the SPX. He is a member the CME where he trades S&P futures as well as foreign currencies & is a regular contributor to CNBC, Bloomberg, BNN, Fox & many other major news networks.