Only two weeks of a lengthy strike against General Motors happened in the third quarter, but that was enough to dent the company’s net profit by about $1 billion US, the automaker reported on Tuesday.
The company’s third-quarter net profit fell seven per cent as a strike by the United Auto Workers union brought its U.S. factories to a standstill.
The Detroit automaker made $2.35 billion, or $1.60 per share, but the strike cost it 52 cents per share of earnings.
Most of the impact from the 40-day strike will hit in the fourth quarter. GM said the strike will wind up costing it $2.86 billion in net income for the year.
That has forced the company to cut its full-year pretax profit guidance from $6.50 to $7 per share, to $4.50 to $4.80.
Excluding one-time restructuring costs, the company made $1.72 per share, beating Wall Street estimates of $1.38, according to data provider FactSet.
Revenue fell 0.9 per cent to $35.47 billion, but still surpassed analyst estimates of $34.95 billion.
Light trucks pace increase in U.S. sales
Workers, who ended their strike on Friday, were able to win a mix of pay raises and lump sums. They also got an $11,000-per-worker signing bonus, faster pay raises for newly hired employees and a path to full-time work for temporary workers. They kept their current top-notch health insurance with workers picking up only three per cent of the cost.
But GM won significant cost savings because it was able to close three underused factories that made cars and transmissions. The company is closing factories in:
- Lordstown, Ohio.
- Warren, Mich.
- Near Baltimore.
The strike forced a shutdown of GM’s Oshawa, Ont., plant, with several hundred other jobs disrupted at its St. Catharines, Ont., location. Its Ingersoll, Ont., assembly plant was less affected, due to pre-strike planning.
In a statement last week, a GM Canada spokesperson said all of its Canadian manufacturing operations were set to be back running this week.
GM’s profit declined even though sales jumped 6.3 per cent in the U.S., the company’s most profitable market. The average sales price rose 2.8 per cent to $41,661 per vehicle compared with a year ago, according to the Edmunds.com auto pricing site. Edmunds provides content to The Associated Press.
“Despite the strike, GM had a lot working to the company’s advantage in the third quarter,” said Jeremy Acevedo, senior manager of insights, said in a statement.
The company, he said, is showing benefits of shedding slow-selling cars from its lineup, and production of new full-size pickup trucks are getting up to speed.
Light trucks accounted for just over 88 per cent of GM’s sales during the third quarter, and truck sales rose during the quarter for the first time. GM has been switching factories over to the new truck through the year, a process that was halted by the strike.