UAW members on strike outside GM plant in Flint Michigan on Sept. 16th, 2019.
Michael Wayland | CNBC
DETROIT – A 40-day strike by the United Auto Workers union against General Motors cost the automaker about $ 3.8 billion for the year and $ 1 billion for the third quarter, much higher than some Wall Street analysts had estimated.
The strike lasted from Sept. 16 until Friday, when a majority of the union's 48,000 members approved the four-year deal. It has been the longest national walkout against the automaker since a 67-day strike in 1970.
After accounting for about $ 900 million in interest and taxes, the strike shaved off about $ 2.9 billion in profits from the automaker's 2019 earnings, or $ 2 a share, the company said Tuesday in its third-quarter earnings release before the markets opened. That includes $ 700 million in after-tax costs, or 52 cents per share, for the third-quarter alone.
Some Wall Street estimates had placed it at more than $ 2 billion in lost vehicle production during the third and fourth quarters. The high end of estimates pegged it at closer to $ 100 million in losses per day.
GM CEO and Chairman Mary Barra said executives know they have "a lot of work to do" in an attempt to make up for the losses from the strike.
"We're moving forward as one team," she told investors during a conference call on Tuesday, adding dealer inventories are "leaner" than the company would like.
GM expects it lost about 300,000 units in production due to the strike, according to GM CFO Dhivya Suryadevara. She said the automaker also lowered its expected savings from cost-cutting initiatives announced in November from $ 4.5 billion to between $ 4 billion and $ 4.5 billion through 2020.
"We're obviously going to maximize and figure out every opportunity to get every dollar we can from a cost-saving perspective," she said during a briefing with media on Tuesday.
The strike's impact was far-reaching, causing GM plants in Canada and Mexico to be temporarily shut down due to a lack of parts to produce vehicles. It also significantly affected GM suppliers, many of whom confirmed temporary layoffs and undisclosed financial losses.
While most of GM's major suppliers have not reported third-quarter earnings, executives with Lear Corp. on Friday said each week of the strike cost the Southfield, Michigan-based supplier between $ 50 million and $ 75 million a week.
Lear, while discussing third-quarter results with analysts, cited the strike as the primary reason for lowering its earnings forecast for the year. The revised forecast included adjusted net income of between $ 765 million and $ 845 million, down from $ 885 million and $ 965 million on lower sales of between $ 19 billion and $ 19.5 billion, down from $ 19.8 billion to $ 20.3 billion.