GM locks in $6 billion credit line as strike's first two weeks cost $200M
DETROIT — General Motors on Wednesday secured a new $6 billion line of credit and estimated that the cost of the United Auto Workers strike was $200 million during the third quarter that ended Sept. 30, a company spokesman said.
The targeted strike against the Detroit Three automakers began on Sept. 15 and is now in its 20th day.
The union has struck two GM assembly plants and 20 parts distribution centers.
The strike cost at GM reflects 16 days in which production was stopped at one GM assembly plant, a mid-size pickup truck and van factory in Wentzville, Missouri. The UAW ordered a strike at a GM SUV assembly plant in Lansing, Michigan, on Sept. 29.
GM also shut its midsize Malibu sedan factory in Fairfax, Kansas, during the last week of September, blaming parts shortages caused by the strike.
The indicated average cost of $12.5 million a day could rise sharply if the UAW shuts down more vehicle production in the weeks ahead.
Against that backdrop, GM said in a securities filing that it has locked in a new, $6-billion line of credit through October 2024. JP Morgan and Citibank are listed as joint lead arrangers for the deal.
The new line of credit will bolster GM’s balance sheet against a protracted strike that could widen to cut off production of its most profitable vehicles — large Chevrolet and GMC pickup trucks and large SUVs such as the GMC Yukon and Cadillac Escalade. GM shares were down 0.5% in morning trading.
The additional liquidity will require GM to maintain at least $4 billion in global liquidity and $2 billion in U.S. liquidity. The terms of the credit agreement also restrict GM from mergers or sales of assets and limits on other, new debt.
Rival Ford Motor secured a new $4 billion line of credit in August. Ford said on Tuesday it had made a new comprehensive contract offer but said a dispute over battery plants remained unresolved.
Ford said the new offer would further boost wages for workers, increase company 401(k) contributions and had further shrunk time needed to get to the top wage rate.
The UAW said on Monday it presented a new contract offer to General Motors. GM said despite the offer “significant gaps remain.” GM has been forced to lay off 2,100 workers at five plants in four states including halting production at its Kansas car plant because of strike impacts.
Ford has laid off about 930 workers and Stellantis 370 workers in Ohio and Indiana because of the strike.
