A day after UAW workers walked off the job at a Stellantis plant, more are now striking GM’s Arlington facility.
This week marks a dramatic escalation in the United Auto Workers’ labor actions against the Big Three automakers, as the union struck profitable Stellantis and General Motors plants. 5,000 workers at GM’s Arlington, Texas plant worked off the assembly line and onto the picket line Tuesday, just a day after 6,800 went on strike at Stellantis’ Sterling Heights facility.
The move comes immediately after GM posted its third-quarter earnings to investors, which totaled $3.56 billion (EBIT-adjusted). The company announced Tuesday it would pay out a dividend of 9 cents per share of common stock to shareholders on December 14, so long as they are a shareholder of record when trading closes on December 1.
“Another record quarter, another record year. As we’ve said for months: record profits equal record contracts,” said Fain in a statement Tuesday. “It’s time GM workers, and the whole working class, get their fair share.”
GM lays out its current stance in its letter to investors
In the company’s letter to shareholders, GM CEO Mary Barra addressed the ongoing strike, now in its fifth week. “Regarding the ongoing strikes at some of our U.S. facilities: I know many of you are concerned about the impact of higher labor costs on our business in the United States.”
“The current offer is the most significant that GM has ever proposed to the UAW, and the majority of our workforce will make $40.39 per hour, or roughly $84,000 a year by the end of this agreement’s term,” Barra said. She went on to suggest the company’s current offer to the UAW may be as far as GM is willing to go: “Accepting unsustainably high costs would put our future and GM team member jobs at risk, and jeopardizing our future is something I will not do.” The raise Barra mentions amounts to 23% over the next 4-1/2 years, which falls short of the UAW’s demands of 40% over the same period.
According to what GM executives told investors on its quarterly earnings call, the strike is currently costing the automaker well in excess of $200 million per week in lost production. With Arlington offline, it’s likely that number will skyrocket, as its full-size SUVs represent one of the most profitable arms of the business. Currently, the automaker accounts for roughly two-thirds of the truck-based, full-size SUV market.
The company is changing course on EVs
While speaking to investors, Barra also said GM would slow its EV rollout and curtail product spending. She said the company has “work to do” to achieve 8-10% pre-tax profit margin in North America by 2025, particularly in wake of the UAW strike. The company will delay its retooling of its large Orion Township, Michigan factory to build electric trucks, saving $1.5 billion in capital investments next year, according to Chief Financial Officer Paul Jacobson.
Pulling back its EV spend to “better manage capital investment while aligning with evolving EV demand” puts a greater emphasis on plants like Arlington to shore up the automaker’s profit margins and assuage investor concerns. While the company touted strong consumer demand in the third quarter — sales were up 21% from a year ago thanks to full-size trucks and SUVs — it’s unclear what impact the UAW strike will have leading up to the end of 2023.
To that end, GM pulled back its previously announced full-year earnings guidance in wake of the mounting strike costs.
As we’ve seen with workers from Ford’s Kentucky truck plant and Stellantis’ Sterling Heights plant now on the picket line, the ultimate impact the ongoing labor strike will have is a constantly moving target. We’re keeping a close eye on GM’s Flint Assembly which builds the Chevy Silverado and GMC Sierra HD, and Ford’s Dearborn Truck Plant which builds the F-150, as those may be the next targets in the UAW steps up walkouts against the Detroit Three.