The 40 day strike at GM’s US factories is going to do more than just delay the 2020 Corvette (that’s what fans really care about), it is going to hurt the bottom line too, quite substantially it turns out. It is going to hit General Motors to the tune of $3 billion in lost earnings, effectively wiping out all of its free cash flow for the year at a time when the car market needs every dollar to invest in new technologies sure to change their fortunes in the coming years.
The announcement was on the back of a strong third quarter profit results. Third quarter pretax profit was down about 6% to $3 billion. The United Auto Workers strike ended up stopping production for the last two weeks of the quarter and hurt profits by $1 billion in-quarter. The largest impact will be in fourth quarter earnings where the remaining $2 billions will hit. More importantly, it means $3 billion in less investment and that is the real issue that will impact GM longer term.