NEWS ANALYSIS

A strike at GM would potentially cost $1.1 billion a week

Some of GM's vehicles have been in tight supply for months, notably its Chevrolet Colorado midsize pickup.

A UAW strike of General Motors, perhaps as early as midnight tonight, could potentially cost the automaker at least $1.1 billion a week in lost revenue and exacerbate shortages of some hot-selling models.

The UAW informed GM Saturday that it could decide by midnight tonight to let expire a contract extension under which GM's 52,600 hourly employees have worked since Sept. 14. That's when the current four-year contract with GM expired.

The two sides have been locked in intense negotiations since Thursday when the UAW made GM its next bargaining target following ratification of a four-year deal with Fiat Chrysler.

If GM and UAW don't reach a new tentative agreement by midnight, the union could again extend its existing contract or call for a strike of GM.

A general strike would shut GM's engine and assembly plants, costing the automaker about 8,800 vehicles of production per day. With each vehicle having an estimated wholesale value of about $25,000, that would cost GM about $220 million per day in gross revenue or $1.1 billion in a week.

This is an estimated figure, but underscores the potential financial impact of a strike against GM.

A GM spokeswoman on Sunday said she couldn’t immediately comment on the potential cost estimate. 

GM's real costs would decline because the company wouldn't incur parts and labor expenses. The cost also would depend on inventories and GM's ability to make up lost production later.

Hot-selling models

To be sure, some of GM’s vehicles have been in tight supply for months, notably its Chevrolet Colorado midsize pickup. There was a 47-day supply of the trucks on dealer lots or en route to stores as of Oct. 1, according to the Automotive News Data Center.

GM had a 71-day supply of the Chevrolet Silverado, its highest-volume and among its most profitable vehicles. That’s on the low side -- GM had a 95-day supply a year earlier.

GM could strike at specific plants to crimp engine or transmission production that would quickly hamstring assembly production across the country. Such a tactical stoppage would cost the UAW strike fund less money. The fund promises striking workers $200 per week in strike pay.

You can reach Dave Barkholz at dbarkholz@crain.com

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