General Motors (GM) reported on Wednesday that the strike called by automobile factory workers on September 15 has cost the company up to $200 million. The CFO of the automobile company, Paul Jacobson, announced the losses this Wednesday in an interview with CNBC in which he reported that GM had received a line of credit of up to $6 billion:
The facility that we announced today is a $6 billion line of credit that I think is prudent in light of some of the messages that we’ve seen from some of the UAW leadership that they intend to drag this on for months.
As reported by Bloomberg, the losses are a result of the decline in income. Sales of Chevy Colorado and GMC Canyon models dropped by 10%. These cars are manufactured at the Missouri plant, one of the sites that has been most affected by the strike.
UAW strike costs the country nearly $4 billion
However, the $200 million that the company has lost is not yet worrying, although investors on Wall Street are concerned about how a longer strike by auto factory workers could lead to more serious consequences on the American economy. Morningstar Auto analyst David Whiston told the Detroit Free Press:
It’s noteworthy, but not a lot of damage because most production is not shut down yet and $200 million on several billion of quarterly (earnings before interest and taxes) is not a large proportion. As more plants get added, it, of course, gets worse, especially once full-size SUVs and full-size pickups get added.
The country is beginning to notice the effects of the shutdowns. This Friday is the 21st day of the strike. According to the Michigan economic consulting firm, Anderson Economic Group (AEG), the strike initiated by the UAW against Ford, GM and Stellantis has already cost the U.S. economy $3.95 billion. Patrick Anderson, CEO of AEG, explained that the country's economy was especially affected this week by the closure of several distribution centers:
Suppliers were particularly hard-hit by the UAW’s strategy of announcing specific plants to be struck just hours before they were shut down. The shutdown of 38 parts distributions centers also crimped dealership service operations and, of course, caused more UAW workers to lose wages.
