GM Strike Cost Automaker Estimated $3 Billion, $18.5 Million in Lost Michigan Income Tax Revenue


The United Auto Workers’ strike against General Motors cost the company $1 billion in earnings and that number is expected to rise to $3 billion on the year, CEO Mary Barra said in a phone call with investors this week.

The six-week strike ended Friday after a new four-year agreement was ratified and workers returned to the job this week.

“From the outset, our goal was to reach an agreement that works for our shareholders, our employees, and our company as we confront the reality of a rapidly transforming industry,” Barra said Tuesday, according to The Detroit News.

The automaker said in a press release that “about two weeks of vehicle production” was lost to the strike in the third quarter.

“The work stoppage in the U.S. negatively affected North American business results in the third quarter and expected results for the year,” the release stated. General Motors expects the strike will cost roughly $2 per share on the year, which amounts to $2.9 billion in losses.

“Despite the work stoppage, GM had a very strong quarter, exceeding on earnings and boosting pre-tax margins in the crucial North American market,” Mainstay Capital Management LLC CEO David Kudla told The Detroit News. “Most importantly, GM assured investors that, with the now ratified UAW agreement, the company was able to retain flexibility to scale operations up or down depending on sales or economic conditions.”

The Lansing-based Anderson Economic Group (AEG) monitored the impacts of the strike throughout October and estimated $989 million in direct wage losses for UAW GM workers and supplier workers in its most recent report.

Additionally, AEG estimated that the strike would result in $313 million in lost federal income and payroll tax revenue, plus $18.5 million in lost Michigan income tax revenue.

“If you look at our key operating segments, primarily North America, it was solid and that was driven by the strength in crossovers and the continued strength in the launch of our full-size pickups,” said GM Chief Financial Officer Dhivya Suryadevara. “It’s important to look at what the underlying business looks like and the underlying business was strong this quarter.”

The new four-year contract between GM and UAW includes the closure of three North American plants, as The Michigan Star reported.

“Our new labor agreement maintains our competitiveness, preserves our operating flexibility and allows us to continue improving our quality and productivity,” Barra concluded. “We remain focused on strengthening our core business and leading in the future of personal mobility.”

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Anthony Gockowski is managing editor of Battleground State News, The Ohio Star, and The Minnesota Sun. Follow Anthony on Twitter. Email tips to [email protected].
Photo “UAW Strike” by UAW.








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