UAW called a strike against GM. Here’s what this means, and what we expect.
Sharply opposing positions are not a new phenomenon in Auto OEM/UAW negotiations. But this year’s negotiations appear to have been complicated by something new… an unprecedented level of distrust of UAW leadership from within UAW’s Rank and File. This dynamic led us to expect UAW to take a particularly hard line. This has now come to fruition.
If contained to just U.S. plants, we estimate that the strike could reduce GM’s earnings by $69 MM per day (a separate analysis of the temporary working capital impact suggests an initial inflow, followed by significant outflows after a few weeks). Our analysis of Suppliers points to impacts of $2, $3, and $5 MM per day for AXL, LEA, and MGA.
But there are reasons to be hopeful that this strike will be relatively short. For GM Investors, the key question will be whether Management maintains their financial commitments (i.e. cost and capex reduction).