GM says UAW strikes were $2.8 billion earnings hit
DETROIT (Reuters) - General Motors Corp GM.N said on Friday the just-ended strike at supplier American Axle & Manufacturing Holdings Inc (AXL.N) and separate strikes by the United Auto Workers at its own plants had reduced its earnings by a total of $2.8 billion.
The total includes about $2 billion in lost earnings for the second quarter because of an unplanned cut in production of about 263,000 vehicles, including some 33,000 of GM's better-selling sedans and crossovers.
In addition, GM said it had pledged $215 million to help fund buyouts and cash "buydowns" in exchange for lower wages at American Axle under a contract ratified on Thursday by the supplier's union-represented workers.
The pressure on GM's cash position from the strikes and a deteriorating U.S. sales market has emerged as a major concern for investors in the No. 1 U.S. automaker. GM shares were down more than 5 percent on Friday, near the low for the year.
GM said in a filing with securities regulators the strike at American Axle had reduced its second-quarter production by 230,000 vehicles, equivalent to a $1.8 billion reduction in pretax earnings.
The American Axle strike, which began in late February, cut 100,000 vehicles from GM's first quarter production schedule, equivalent to $800 million in lost earnings, it previously disclosed.
GM, like other major automakers, books revenue when vehicles are assembled and shipped to dealers rather than when they are sold to consumers. That means it faced immediate losses on paper from the reduced production of even the slow-selling trucks and SUVs because of the strike.
About 3,650 UAW-represented workers at American Axle voted to ratify a concessionary contract on Thursday that cuts their wages by more than a third and closes three facilities, ending a strike that had idled about 30 GM plants in North America.
Most of the affected GM plants make slow-selling trucks and SUVs, such as the Chevrolet Silverado and Chevrolet Tahoe.
GM said it planned to make up for only a fraction of the lost production from the American Axle strike because of the economic downturn and a market shift toward smaller and fuel-efficient cars and crossovers.
At the same time, GM said it would make up for lost production of better-selling sedans and crossovers such as the Chevrolet Malibu sedan and the Buick Enclave.
The automaker said it had lost 33,000 units of production of those vehicles in the second quarter when UAW-represented factories in Michigan and Kansas making those vehicles went on strike over now-settled, plant-specific contract terms.
GM's filing confirmed that the automaker had raised its offer of financial support to American Axle in the final negotiations aimed at reaching a settlement.
GM had said earlier it had agreed to offer $200 million. A UAW official said earlier this week that GM's additional pledge was earmarked to fund supplementary unemployment benefits at American Axle.
The Detroit-based supplier has not commented on the impact of the strike and settlement on its own finances. It said on Friday it would hold a conference call for analysts next Wednesday to discuss those issues for the first time.
GM shares were down more than 5 percent at $17.49 in trading on the New York Stock Exchange. Shares of American Axle were down 4.2 percent at $18.45.
(Reporting by Soyoung Kim, additional reporting by Nick Zieminski New York; editing by Phil Berlowitz)
