On September 29, 2023, members of the United Auto Workers union went on strike at the General Motors Lansing Delta Assembly Plant in Lansing, Michigan.
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General Motors New labor contracts with the United Auto Workers and Canadian union Unifor are expected to add $9.3 billion to its costs, adding about $575 to the cost of each vehicle during the deal.
Most of the cost increase comes from GM’s agreement with the UAW, which expires in April 2028. The agreement, approved earlier this month, includes hourly wage increases of at least 25%, the restoration of cost-of-living adjustments and enhanced employee benefits. Profit sharing payments and other benefits.
GM’s agreement with the United Auto Workers comes after contentious negotiations between the two sides that included personal attacks, political smears and about six weeks of targeted strikes by the union.
However, some of the increased costs may be passed on to consumers in the form of higher vehicle prices, but GM, along with other Detroit automakers, Ford and starThe company has also negotiated a new labor agreement and has several other options, such as business cuts, layoffs and other means to help offset costs.
As part of a business update on Wednesday, General Motors disclosed the expected impact of the labor deal, launching $10 billion in accelerated share repurchases, increasing its dividend and restoring full-year 2023 guidance.
General Motors said Wednesday that targeted strikes by the UAW that ended in late October resulted in a $1.1 billion loss in adjusted earnings before interest and taxes (EBIT) in 2023. Additional wages, bonuses and other benefits from the labor contract and the Unifor agreement will cost the company another $1.1 billion. The automaker said it will invest $200 million this year.
GM said it expects labor costs to increase by $9.3 billion as follows: $1.5 billion in 2024; $1.8 billion in 2025; $2.1 billion in 2026; $2.5 billion in 2027; Between January and April 2028 Investment of US$1.1 billion.
GM Chief Executive Mary Barra said in a statement Wednesday that the company is finalizing a budget for next year that will “fully offset the incremental costs of our new labor agreement.”
GM expects the cost of each vehicle to increase by $500 by 2024. Last month, crosstown rival Ford predicted that assembly costs would increase by $850 to $900 per vehicle.
At the time, Ford Chief Financial Officer John Lawler said the company was working to “increase productivity and efficiency and reduce costs across the company” to offset additional costs and meet previously announced profitability targets. This includes the cancellation or postponement of $12 billion in electric vehicle-related investments.
Ford expects to provide further updates on the cost impact to investors soon.
chrysler parent company starThe company, the second of the “Big Three” U.S. automakers to reach an agreement with the United Auto Workers, has not yet disclosed the expected cost of its labor deal with the union.
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