GM is Laying Off 6,000 Workers
GM on Tuesday idled the Silao facility in Mexico that produces its highly-profitable Chevrolet Silverado and GMC Sierra 1500 pickups, temporarily laying off 6,000 workers. These layoffs bring the total layoffs for non-UAW represented employees in North America with GM to about 10,000. The total number of employees at auto suppliers who have been temporarily laid off by the strike is unknown but estimated to be in the thousands.
A GM spokesman said the “primary focus is to get a deal and get everybody back to work” as soon as possible.
The idling of the Silao plant means all of GM’s pickup production in North America has been cut-off as a result of the UAW’s strike.
GM shares were down more than 3% early afternoon after opening Tuesday at $37.47. The stock is up about 8.5% for the year.
“It’s a big deal,” said Michelle Krebs, executive analyst with Autotrader. “The longer this strike goes on, the more other plants will be affected. This comes at a critical time for GM and its truck launch because it was just introducing the heavy-duty version. This time of year is the biggest time for truck sales.”
Cox Automotive, Autotrader parent company, reports dealers had a 93 days-supply of Chevrolet Silverados and 84-days supply of GMC Sierras to begin September, the latest available data. The healthy industry average is 64 days.
Art Wheaton, a labor professor at the Worker Institute at Cornell University, said production of the pickups is “one of the first triggers” that he believes will push GM to concede to a deal with the UAW.
“That’s’ what’s finally going to make GM start to move to get a deal because they are not going to be able to make up that revenue,” he said. “GM is going to start feeling the pain.”
Wall Street analysts estimate GM is losing roughly $50 million to $100 million per day in lost production.
J.P. Morgan, in a note to investors Monday, estimated the UAW’s strike cost GM more than a billion dollars during the third quarter.
Barclays analyst Brian Johnson last week cautioned the strike could drag on into the fourth quarter costing roughly $750 million for GM.
UBS’ Colin Langan estimated a prolonged strike would shave roughly 10 cents off GM’s earnings per share during the third quarter, specifically from the lost production at its pickup and SUV factories.