GM withdraws 2023 guidance as UAW strike costs soar
By Joseph White
DETROIT (Reuters) -General Motors on Tuesday withdrew its previous guidance for 2023 profits and near-term electric vehicle production as costs related to the United Auto Workers strikes jumped to $200 million a week during October.
GM's third-quarter net income fell 7.3% to $3.06 billion, while revenue rose 5.4% to $44.1 billion. The adjusted earnings per share tracked by analysts of $2.28 were ahead of Wall Street expectations, and up from $2.25 a year ago because of the effect of share buybacks.
GM shares rose 2.6% in premarket trading.
The rising toll of the UAW strikes, the outlook for higher labor costs once a new contract is reached, rising warranty expenses and an uncertain macro-economic outlook have forced GM to abandon previous targets for full-year financial performance that it had lifted in July.
The UAW walkouts cost the company $200 million during the third quarter and $600 million so far in the fourth quarter, GM Chief Financial Officer Paul Jacobson said in a briefing with reporters.
Strike costs are now running at $200 million a week, Jacobson said. He would not discuss the potential impact should UAW President Shawn Fain order new walkouts at GM's most profitable North American factories such as the Arlington, Texas, plant that builds Cadillac Escalades and Chevrolet Suburbans, or the Flint, Michigan, heavy duty pickup assembly plant.
As the pace of EV sales growth has slowed in North America and even industry leader Tesla (NASDAQ:TSLA) is expressing caution over the pace of its expansion, GM is shifting its EV strategy in the region.
The Detroit automaker will now accelerate production to meet customer demand and hit profit targets, rather than aiming for specific sales volume
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