GENERAL Motors Corp said strikes at two United States plants and at a parts supplier cut pretax earnings by US$2.8 billion and reduced production by about 363,000 cars and trucks.
The three-month walkout at former subsidiary American Axle & Manufacturing Holdings Inc will account for most of the expense, or US$2.6 billion, for the year's first half, GM said last Friday in a US regulatory filing. The strike, resolved last Thursday, cost GM about 330,000 vehicles while 33 factories halted or slowed output.
The labor disputes will add to the drag on GM's financial performance in North America, the only one of four global regions that failed to post a profit last quarter. The production cuts caused by shortages of American Axle parts may also spare GM from making additional reductions as US sales shrink.
"GM would have had to take this pain of reducing the production at some point this year because of their high inventory," said Gregg Lemos Stein, a credit analyst at Standard & Poor's in New York. "The strike's impact would have been spread out over this year in some fashion."
The 330,000 vehicles lost from the American Axle disruption and another 33,000 from the two walkouts at GM's own plants amounted to about 9 percent of GM's output in the US and Canada in 2007, Bloomberg News said. GM's US sales are down 12 percent this year.
GM also said it raised by 7.5 percent the amount it pledged to help settle the American Axle dispute. The auto maker will now contribute US$215 million to help fund buyouts and early retirements, up from a May 8 estimate of US$200 million.
The payment is part of more than US$1.4 billion in new costs GM disclosed this month, adding pressure to seek new funding. GM already has raised more than US$27 billion in the past three years through asset sales such as the Allison Transmission unit and a 51-percent stake in the GMAC LLC finance company.
Global sales
Strikes by United Auto Workers locals over work rules at a Chevrolet Malibu plant in Kansas and a GMC Acadia factory in Michigan will result in a pretax expense of US$200 million in the second quarter, Detroit-based GM said.
GM has posted losses of more than US$54 billion since the end of 2004 as rising fuel prices and competition from Toyota Motor Corp and other overseas auto makers furthered declines in US market share. Toyota surpassed GM by 159,000 cars and trucks in the first quarter for the global sales lead, after almost beating out the US company for all of 2007.
Standard & Poor's equity analyst Efraim Levy has cut his 2008 forecast for GM by US$6.45 a share to a loss of US$4.42 a share because of the cost of the American Axle strike and his expectations for continued US sales declines, larger losses at GMAC and rising commodities expenses.
During the balance of the year, GM will make up the output lost from the Lansing/Delta Township, Michigan, and Fairfax, Kansas, plants where it also builds Saturn Aura sedans and Saturn Outlook and Buick Enclave sport-utility vehicles.
GM said it will only cover a "portion" of the 330,000 units lost from the American Axle strike because of "the market shift away" from the SUVs and large pickups affected.
Truck sales for GM are down 17 percent this year in the US, against 14 percent for the industry, according to Autodata Corp.