Production resumes at GM plants after six-week strike
Production is back on at 55 General Motors Co. facilities after six weeks off for the United Auto Workers national strike against the Detroit automaker.
"Our focus is to return to regular production schedules as quickly as possible," GM Spokesman Dan Flores said.
Once UAW members approved a new four-year contract on Friday, GM pushed to get back to producing vehicles as early as Saturday with voluntary shifts at some plants, including its truck plants in Flint and Fort Wayne.
Experts expect GM's production to be at full capacity within a week or so, but there are likely to be some bumps in the road along the way as supply production ramps back up.
"I don’t think it’s going to take that long," said Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive Research. "GM doesn’t want to be losing any more money, workers want to get back on their jobs and there's certainly a lot to get done."
The non-UAW GM facilities in Canada, Mexico and Ohio that had to halt production during the strike also restarted production this week.
There's an emphasis made on ramping up production quickly at truck plants in Fort Wayne, Flint and Arlington, Texas because "they are the most profitable and highest priority right now," Dziczek said. In order to ramp up production at vehicle assembly plants, the automaker is likely to focus efforts on its transmission and engine plants, which are likely to see overtime production, Dziczek said.
GM also noted that it would ramp up production at parts suppliers plants to feed dealers in need of inventory.
A "vast majority" of GM's top suppliers ended production "pretty quickly," after the strike started on Sept. 16, said Michael Robinet, executive director at IHS Markit.
"That's for a lot of reasons," Robinet said. "One of them is there's only so many racks ... there's only so many places you can store."
Some parts are customized for specific types of vehicles so "they are not going to build several weeks ahead," for those particular components, he said.
When supplier production starts back up is determined by where the supplier is in the chain, how quickly production at that supplier stopped when the strike started and how quickly the parts are needed.
"Everybody should be back ... pretty quickly some are going to have a bit of a lag depending on how much they built up," Robinet said.
During the strike, Lear Corp. had to shut down four plants in Fort Wayne, Flint, Arlington and Wentzville, Missouri that manufacture seats for the nearby GM facilities. Those facilities have now resumed production.
Lear Corp. CEO Ray Scott said on a Friday earnings call that the Southfield seating and electrical systems manufacturer has lost $525 million in revenue because of the six-week strike, forcing it to lower its profit guidance by more than $100 million for the year. GM accounts for 18% of its revenue.
Auburn Hills-based Nexteer Automotive, a supplier of steering and driveline products, had to temporarily reduce its workforce because of the strike.
“While we are eager to resume production, we understand this process can take time," Dennis Hoeg, Nexteer's vice president and North American division president, said in a statement to The Detroit News on Monday. "We are monitoring the situation and actively working to bring back our employees as quickly as feasible according to customer schedules to meet their requirements.”
Cox Automotive reported that GM had a healthy inventory during the strike with an estimated 81 days’ supply of total car, truck and SUVs at the beginning of October, above the industry’s 66 days. Updated inventory levels won't be available until next week.
"GM had plenty of inventory going into the strike," said Michelle Krebs, executive analyst for Cox Automotive. "Overall, it was above what the industry average was with only a couple of exceptions and they really poured on the incentives, as did everybody."
GM dealers sold 738,638 vehicles in the U.S. in the third quarter of 2019, an increase of 6% compared with the third quarter of 2018.
GM on Tuesday is expected to report earnings-per-share $1.36 per share and $34.12 billion in revenues, said David Kudla, Mainstay Capital Management chief investment strategist. Kudla expects the "brunt of the strike" will really show up in the fourth quarter since more days of the strike were covered in that quarter and "GM will be playing catch up on now lower inventories and shortages of hot-selling vehicles."
Staff writer Breana Noble contributed