Lengthy UAW strike at General Motors to cost $1.5 billion: Credit Suisse

General Motors likely lost production of about 100,000 vehicles in the third quarter because of an ongoing workers’ strike. (AFP)
Updated 11 October 2019

Lengthy UAW strike at General Motors to cost $1.5 billion: Credit Suisse

  • General Motors likely lost production of about 100,000 vehicles in the third quarter
  • The carmaker may now have to revise its target of $4.5 billion in cost savings through 2020

An ongoing workers’ strike at General Motors Co. could cost the automaker about $1.5 billion, brokerage Credit Suisse said on Friday, throwing the US automaker’s cost reduction plans off the track and forcing key suppliers to cut their 2019 outlook.
The brokerage has assumed the strike by the United Auto Workers (UAW) union, currently in its 26-day, to last until Oct. 21.
GM, which likely lost production of about 100,000 vehicles in the third quarter, is at the risk of losing another 170,000 vehicles in the current quarter, the brokerage said, with the impact spreading to some of GM’s facilities in Mexico and Canada that receive parts from its US factories.
“While investors may look through the one-time impacts ... the strike reminds us of the challenge of investing in OEMs at this point in the cycle,” analyst Dan Levy wrote in a note.
The brokerage said GM may now have to revise its target of $4.5 billion in cost savings through 2020, announced last year, as production curtailments and labor-related cost reductions may not happen as fast as the company had expected.
“We assume just under $900 million of reduced costs or 20 percent of the original (target),” Levy said.
Credit Suisse said the strike will hurt suppliers, including American Axle, Aptiv, Lear Corp, Delphi Technologies, and Dana Inc, whose exposure to GM varies between 5 percent and 18 percent, with American Axle at 40 percent.
Last week, Canadian auto parts maker Linamar Corp. estimated a profit impact of up to C$1 million per day due to a fall in orders from its customer General Motors.
Credit Suisse lowered its 2019 earnings per share estimate for GM by 83 cents to $6.11, below the Wall Street consensus of $6.56, according to IBES data from Refinitiv, as the No.1 automaker is also at the risk of losing market share to smaller rivals such as Ford Motor.
The brokerage has cut its price target on GM’s stock to $46 from $50, while reaffirming its “outperform” rating.
Of 19 brokerages, 14 rate GM “buy” or “higher” and five “hold,” with no “sell” rating. The median price target for the stock is $48, representing an upside of more than 38 percent to Thursday’s close.


Key to success is passion: PepsiCo official

“I always think success is married with passion,” Simon Lowden said, adding that he likes to get involved with ideas that excite him
Updated 14 November 2019

Key to success is passion: PepsiCo official

  • Lowden was speaking at a session titled “100 years is a long time: Preparing for multiple shifts.”

RIYADH: The key to success is being passionate about what you do, Simon Lowden, chief sustainability officer at PepsiCo, told a brainstorming session at the Misk Global Forum in Riyadh on Wednesday.

“I always think success is married with passion,” he said, adding that he likes to get involved with ideas that excite him.

“I started my life in a small farming village, went to London to attend university, joined PepsiCo … and now I run our sustainability agenda,” he said. “This made me rich as a person, and I did things I really enjoyed.”

Lowden was speaking at a session titled “100 years is a long time: Preparing for multiple shifts.”

Other panelists included Dave Brooke, vice president of client solutions at Dell Technologies; Kevin Gaskell, an international speaker on leadership and business performance; Deloitte CEO David Sproul; and Nancy Yammout, general director of the NGO Rescue Me. The session was moderated by Lebanese journalist and politician Naufal Daou.