US Big Three Automakers Face $9.3 Billion Loss Due to UAW Strike Expansion

GM·Stellantis·Ford
Damage Spreads Due to 6-Week Strike
GM Reports $800 Million Cumulative Loss in Q3
Concerns Over Additional $200 Million Weekly Loss

The United Auto Workers (UAW), which has been on strike for six weeks against the three major American automakers, is increasing pressure by expanding the strike to more profitable factories. The number of strikers, initially 25,000, has risen to 46,000 this week, causing the economic losses for the companies to swell to $9.3 billion (approximately 12.5159 trillion KRW).

General Motors (GM) announced on the 24th (local time) through its Q3 earnings report that it has incurred cumulative losses of $800 million due to the strike, and if the strike continues, an additional $200 million loss per week is expected. GM’s net profit for this quarter was $3.1 billion, down 7% compared to the same period last year. Due to the strike’s impact, GM also withdrew its earnings guidance for this year, which had previously forecasted operating profits between $12 billion and $14 billion.

GM is also reported to have scrapped its plan to produce 400,000 electric vehicles over two years by mid-next year due to production schedule disruptions. Originally, GM aimed to aggressively increase electric vehicle production to keep up with competitors like Tesla. The start of operations for the electric vehicle factory planned in Michigan has also been postponed by one year.

The market estimates that the three companies, including GM, Stellantis, and Ford, have suffered massive losses of $9.3 billion due to the six-week-long strike. This estimated damage amount only includes losses from reduced production and labor costs due to workers arbitrarily shortening their working hours. According to The Wall Street Journal (WSJ), if the damage from the strike’s spread to Stellantis’s pickup truck factory since the 19th and GM’s Texas plant is added, the total losses will increase further.

The strike has also caused significant damage to vehicle production. Emmanuel Rasner, a strategist at Deutsche Bank, Germany’s largest commercial bank, analyzed that GM produced 62,000 fewer vehicles during the strike period compared to when there was no strike.

The three companies sat at the negotiation table with the union to prevent further damage, but the talks broke down without any agreement. The UAW demanded a 40% wage increase over the next four years, but GM offered 20%, Stellantis 21.4%, and Ford 23%, rejecting the union’s demands.

As the gap failed to narrow, the UAW escalated its pressure campaign by expanding the strike to key factories of the three companies. On the 11th, the UAW extended the strike to Ford’s key production facility, the truck plant in Kentucky, and on the 23rd, the strike began at Stellantis’s pickup truck factory in Sterling Heights, Michigan. This factory produces the popular ‘RAM 1500’ pickup truck in the U.S. Then, on the 24th, the strike started at GM’s Texas Arlington plant, a major revenue source for GM. This plant produces large sport utility vehicle (SUV) models popular in the U.S. market and is considered a core profit center for GM.

The UAW is employing a strategy of gradually increasing the number of striking plants as negotiations drag on. After GM announced its Q3 earnings, the UAW issued a statement saying, "GM’s negotiation proposal is insufficient to share profits with workers," and added, "Now is the time for all GM workers to receive their fair share."

This content was produced with the assistance of AI translation services.