General Motors Secures $6B Credit Line As UAW Strike Costs Rise

ImpactWealth.Org, October 5, 2023

General Motors (GM) has secured a new $6 billion line of credit as it braces for prolonged strikes by the United Auto Workers (UAW) union. The move comes as the strike has already cost GM $200 million in the third quarter. GM took action to counter the impact of the UAW strike on GM stock price.

GM CFO Paul Jacobson said the new credit line is “prudent” in light of “indications from UAW leadership about extended strike actions.”

The UAW strike began on September 15 and has since expanded to include GM’s parts and distribution facilities nationwide. The strike has forced GM to idle several plants, including its Fairfax Assembly Plant in Kansas, where it builds the Cadillac XT4 SUV and the Chevrolet Malibu sedan.

GM CEO Mary Barra and Ford CEO Jim Farley have criticized UAW President Shawn Fain and the union’s strike strategy, arguing that Fain is not actually interested in reaching deals for 146,000 workers at GM, Ford, and Stellantis.

The newly secured $6 billion line of credit 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.

The credit line comes more than a month after Ford obtained a $4 billion line of credit to help it manage through “uncertainties” and impact of UAW strike on GM stock price in the market.

What does this mean for investors?

The UAW strike is a significant challenge for GM and the broader automotive industry. The strike has already disrupted production and could lead to further financial losses for automakers.

The new $6 billion credit line gives GM some financial breathing room, but it remains to be seen how long the strike will last and what impact it will have on the automaker’s bottom line.

Investors should closely monitor the strike situation and consider the potential impact on GM’s financial performance.