Investing

UAW strike has now cost $2 billion, could 'bring GM to its knees,' Bank of America says

Key Points
  • "Everyone hurts" in the GM strike, which is in its fifth week, Bank of America says.
  • "Investors likely will also react negatively if management is perceived to have caved into labor's demands," BofA's John Murphy says in a note.
United Auto Workers members on strike picket outside General Motors' Detroit-Hamtramck Assembly plant on Sept. 25, 2019 in Detroit.
Michael Wayland / CNBC

The strike by General Motors workers has cost about $2 billion through the first four weeks, Bank of America estimates, saying that the beginning of week five means "everyone hurts."

"A prolonged strike could burn significant cash and bring GM to its knees, but investors likely will also react negatively if management is perceived to have caved into labor's demands and GM's long-term competitiveness is threatened," Bank of America analyst John Murphy said in a note to investors on Tuesday.

VIDEO1:5301:53
General Motors CEO Mary Barra meets with UAW leaders

The strike by the United Automobile Workers union is costing GM about $100 million in lost earnings before interest and taxes per day, Bank of America estimated. The firm also noted that the total lost profit has cost each GM worker as much as $4,000 in net take-home pay.

Negotiations are continuing. The union summoned local leaders to Detroit to meet Thursday for an update on the negotiations. The union has traditionally done this when a tentative agreement has been reached or, as was the case a month ago, to discuss and vote on other actions such as a strike.

-- CNBC's Michael Bloom and Michael Wayland contributed to this report.