Investing

Auto workers strike has cost GM over $1 billion, JP Morgan estimates

Key Points
  • "GM's US production stopped immediately when the UAW [United Auto Workers] walked off the job on September 16," J.P. Morgan said.
  • The firm estimates the strike has now cost the automaker more than $1 billion during the third quarter.
  • J.P. Morgan's cost estimate aligns with what CNBC has previously reported.
United Auto Workers members on strike picket outside General Motors' Detroit-Hamtramck Assembly plant on Sept. 18, 2019 in Detroit.
Michael Wayland / CNBC

The continuing strike by General Motors union workers has now cost the automaker more than $1 billion during the third quarter, J.P. Morgan estimates, with GM's slowed production continuing longer than the firm expected.

"GM's US production stopped immediately when the UAW [United Auto Workers] walked off the job on September 16 and we estimate its Canadian and Mexican facilities became progressively impacted throughout the first week," J.P. Morgan analyst Ryan Brinkman said in a note to investors on Monday.

The UAW strike is now in its third week, which Brinkman said is longer than J.P. Morgan expected. About 48,000 UAW members have been picketing since Sept. 1, with workers receiving a fraction of their weekly compensation, made up in strike payments from UAW.

J.P. Morgan's cost estimate aligns with what CNBC has previously reported.

"GM likely has some ability to recover a portion of these lost profits by shifting production from 3Q into 4Q, although the automaker will also likely be limited in its ability to add production for vehicles already in high demand or in launch mode (such as its high profit full-size "heavy duty" pickup trucks)," Brinkman said.

J.P. Morgan is keeping its overweight rating on GM's stock with a price target of $53 a share because of it may be able to make up some of the lost production. The stock closed Monday at $37.48.

– CNBC's Michael Bloom contributed to this report.

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