Newspaper article THE JOURNAL RECORD

Analysts Predict GM Earnings Will Plunge Due to Union Strikes

Newspaper article THE JOURNAL RECORD

Analysts Predict GM Earnings Will Plunge Due to Union Strikes

Article excerpt

DETROIT -- General Motors Corp. is expected to post sharply lower fourth quarter earnings because strikes by union workers disrupted North American production and cut profits by $700 million.

The world's largest automaker is expected on Tuesday to report fourth quarter profit from operations of 52 cents a share, based on the average estimate of 22 analysts surveyed by IBES International Inc. That's down from $1.98 a share, or $1.87 billion, in the year- earlier period.

The labor problems and higher spending to introduce 15 new car and truck models probably pushed GM's North American automotive operations into the red for the most recent October to December period, analysts said. Business outside North America was profitable, though less so than in 1995. "Earnings were messed up pretty severely by the strikes," said Burnham Securities analyst David Healy. The walkouts cut planned production by 151,000 units -- 113,000 cars and 38,000 trucks -- and cost it 91 cents a share, GM said. The October and November strikes by the Canadian Auto Workers and United Auto Workers preceded agreements on new three-year national contracts. The Canadian strikes shut down car and truck assembly plants and some U.S. and Mexican parts plants. The UAW walkouts targeted production of high-profit, full-size pickup trucks and sport utility vehicles, including the Suburban, Tahoe and Yukon. GM told analysts late last year that it was spending more than expected for sales incentives in North America and in Europe. It also said marketing and other costs related to the introduction of new cars and trucks, which include a new family of minivans as well as Chevrolet Malibu and Buick Regal cars. Healy estimates GM will lose $250 million in its North American car and truck operations. That compares to a $603 million profit in the year-earlier period. …

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