General Motors on Tuesday included a revised profit forecast for 2023 in its third-quarter earnings report, published hours before the United Auto Workers union announced a new strike against the company’s Texas SUV plant.
Although analysts had worried the United Auto Workers strike would impact its bottom line, General Motors finished the third quarter ahead of projections. From July through September, the automaker recorded revenue totaling $44.13 billion from sales of more than 981,000 vehicles worldwide, a year-over-year gain of 5.4% but a decline of roughly 1.4% from the April through June period. Its net income during the period declined by roughly $264 million from Q3 2022 but increased by almost half a billion from Q2 2023.
Yet, in spite of its overall success, the automaker now says it has lost $800 million in operating profit due to the United Auto Workers strike and expects to continue losing money at a pace of $200 million per week. Noting the prolonged nature of the strike, now nearing the end of its sixth week, General Motors withdrew its profit estimate of $12 billion to $14 billion for the full year. A revised guidance will be released once a deal with UAW negotiators has been reached, according to company CFO Paul Jacobson, who also stressed that the manufacturer had been moving “toward the upper half of our guidance prior to any of those strike impacts.”
Mere hours after the automaker’s earnings were published, United Auto Workers President Shawn Fain called on employees at GM’s Arlington, Texas facility to join the union’s strike efforts. The factory builds high-demand, high-profit-margin SUVs, including the Chevrolet Suburban and Cadillac Escalade. Compared to other Detroit-Three brands, Fain has arguably shown the most aggression toward General Motors, targeting its operations in multiple strikes and criticizing company executives for their lack of interest in negotiating.
In a statement, the UAW chief acknowledged that the move was influenced by the automaker’s untimely Q3 report, which painted an almost rosy picture of its finances. However, by the end of September, the UAW strike had only been in effect for two weeks. Should it continue further into the final months of the year, the impact is likely to be more noticeable in GM’s next earnings report.