Daily Management Review

WSJ estimates General Motors damage from strike at $ 100 mln per day


A strike by workers who seek benefits and higher salaries could cost General Motors up to $ 100 million a day, according to analysts polled by The Wall Street Journal. The consequences of the strike on the US economy will not be as significant as in the 90s, as the number of unions has declined since then, the newspaper notes.

According to Credit Suisse experts, if the strike continues, GM will begin to lose more than $ 50 million per day from operating profit. Morningstar Inc. believes that it will be closer to $ 80 million per day, and Citigroup analysts estimate the figure at about $ 100 million.

The rally, organized by the United Auto Workers (UAW) union since September 16, has involved around 46,000 people from 33 businesses and 22 distribution depots in ten states. WSJ recalls that in 1996, at the call of the union, 177,000 GM employees began to strike.

The US division is the most profitable for the company. The workers began to go on strike at a time when GM was trying to cut costs by $ 4.5 billion by the end of 2020 in order to protect itself from possible losses in the future. As part of the restructuring program announced in November 2018, the company planned to close a number of plants, but promised to transfer the majority of workers to its other enterprises.

UAW representatives are demanding that GM stop closing underloaded plants, increase salaries and employee benefits, as well as to improve job security for those hired on a temporary basis. Key differences in the negotiations are related to health care and temporary workers, WSJ sources say.

source: wsj.com