(Bloomberg) -- General Motors Co. said a historic strike by the United Auto Workers has already cost $200 million in the first two weeks, prompting the company to secure credit as it braces for more losses.
The union on Sept. 15 walked out of a Missouri plant that builds the company’s Chevy Colorado and GMC Canyon mid-size trucks. Sales of those two vehicles fell at least 10% in the quarter, according to GM. A week later, the strike expanded to include all of GM and Stellantis NV’s parts-distribution facilities in the US. A third assembly plant in Lansing, Michigan, was struck last week, stopping production of the Chevrolet Traverse and Buick Enclave crossover sport-utility vehicle models.
GM on Wednesday announced that it’s setting up a $6 billion line of credit to shore up liquidity, a sign that it’s buckling in for a prolonged work stoppage. While talks with the UAW continue, GM is the only one of Detroit’s three legacy carmakers that has been targeted by the union for expanded walkouts in each of the past two weeks. Stellantis and Ford Motor Co. have each been spared once, which the union said was due to progress in their contract negotiations.
GM’s total automotive liquidity stood at $38.9 billion as of June 30, so it’s not at risk of running out of money anytime soon. The Detroit-based company wants the 364-day revolving credit line, which will mature on Oct. 1 next year, to maintain operational flexibility, according to a spokesperson.
Joel Levington, a credit analyst with Bloomberg Intelligence, said GM’s new credit facility “is a prudent effort to bolster its already significant financial flexibility.” He also noted that Ford got $4 billion in commitments from its lenders in August.
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