Impact of UAW Strike on GM

Alert

September 17, 2019 UAW Strike – Potential Impact to GM

• On September 15, 2019, the UAW declared a national strike on General Motors, leading to roughly 46,000 hourly workers to walk off the line at 11:59 p.m. This is the first national strike since 2007. The two sides are at odds over wages, benefits, investments, job security and temporary workers.

• The strike impacts over 30 manufacturing plants in the US, including 12 vehicle assembly plants and eight engine and transmission plants.

• LMC Automotive estimates that a strike affecting only US assembly plants would cost GM 7,700 units of lost production per day, while this would approach over 43,500 units if it were to last a week.

• Since powertrain and parts plants in the US are also affected by the strike, there is potential that vehicle production in Canada and Mexico could also be impacted. LMC estimates that a strike affecting all vehicle assembly plants in the region could cost GM up to 12,400 units a day and 68,500 units per week.

Plant Daily* Weekly* Notable Vehicles Arlington 1,200 7,170 Chevrolet Tahoe, GMC Yukon Bowling Green 60 280 Chevrolet Corvette Fairfax 860 4,300 Chevrolet Malibu, Cadillac XT4 Flint Truck 890 5,360 Chevrolet Silverado HD, GMC Sierra HD Fort Wayne Truck 1,220 7,320 Chevrolet Silverado, GMC Sierra Hamtramck 140 690 Chevrolet Impala, Cadillac CT6 Lansing Delta Township 790 4,760 Buick Enclave, Chevrolet Traverse Lansing Grand River 290 1,450 Chevrolet Camaro, Cadillac CT5 Orion 260 1,300 Chevrolet Bolt, Chevrolet Sonic Spring Hill 900 4,500 Cadillac XT5, Cadillac XT6, GMC Acadia Springfield 80 400 Chevrolet Express, Chevrolet Savana Wentzville 1,000 5,980 Chevrolet Colorado, GMC Canyon US Total 7,690 43,510 Ingersoll Car 710 3,580 Chevrolet Equinox Oshawa 1 180 870 Chevrolet Impala Oshawa 2 430 2,140 Chevrolet Silverado, GMC Sierra Canada Total 1,320 6,590 Ramos Arizpe 1,030 5,170 Chevrolet Blazer, Chevrolet Equinox San Luis Potosí 1,110 5,540 GMC Terrain, Chevrolet Trax Silao 1,290 7,730 Chevrolet Silverado, GMC Sierra Mexico Total 3,430 18,440 NA Total 12,440 68,540 * Based on planned September and October output

• GM produces 6,000 engines and 3,900 transmissions daily in the US. If the strike lasts a week, this would result in a loss of production of 29,800 engines and 19,500 transmissions in the US alone.

• Given the high reliance on engines and transmissions from Mexico and Canada for US installation, GM’s powertrain operations in those countries will eventually be forced to slow or stop production.

• If the strike impacts all of GM’s North American engine and transmission plants, the daily production loss could be as high as 12,900 engines and 13,400 transmissions, or a weekly loss of 64,400 engines and 67,000 transmissions.

Engine Plant Daily Weekly Engine Families

Tonawanda 2,530 12,650 CSS, LGE, Gen V, Gen VI

Spring Hill 370 1,850 CSS, SGE, L850, Gen VI

Moraine 750 3,750 DMAX

Flint South 560 2,800 CSS+, SGE

Romulus 1,690 8,450 HFV6

Bowling Green 50 250 HP V8, Gen V, Gen VI

US Total 5,950 29,750

Ramos Arizpe 1,910 9,550 Gen V, CSS

St. Catharines 2,310 11,550 HFV6, Gen V

Toluca 1,860 9,300 CSS, SGE

Silao 840 4,200 Gen IV

NA Total 12,870 64,350

Transmission Plant Daily Weekly Transmission Families Romulus 410 2,050 10L

Toledo 3,480 17,400 6L, 6T, 8L, 9T

US Total 3,890 19,450

Ramos Arizpe 680 3,400 CVT250

San Luis Potosi 3,400 17,000 6T, 9T

Silao 4,630 23,150 6L, 8L, 10L

St. Catharines 800 4,000 6T

NA Total 13,400 67,000

• General Motors currently has the largest inventory of any automotive manufacturer in the US, with nearly 30% higher volumes than the next OEM, Ford. As of September 1st, GM was holding roughly 800,000 units of inventory, with more than 90% of the current inventory being produced in North America. That translates into a 77-day supply, which is significantly higher than the industry average of 61 days.

• The majority of GM’s inventory consists of 515k units of Chevrolet vehicles and 165k units of GMC vehicles. SUVs and Pickups make up an even split of the vehicles currently on hand, with each bodytype accounting for 40% of inventory.

• GM has clearly attempted to stock the high volume/high profit models, as the Chevrolet Silverado Pickup has the highest inventory at 200k units (93-day supply), followed by the GMC Sierra Pickup at 78k units (84-day supply). The Chevrolet Equinox SUV rounds out the top three, with 68k units of inventory (63-day supply).

Days Days Brand Inventory Bodystyle Inventory Supply Supply Buick 98 66,200 Car 73 139,100

Cadillac 89 47,700 SUV 72 316,400

Chevrolet 72 515,600 Van 65 23,500 GMC 84 165,500 Pickup 88 321,100 GM Total 77 795,000

Source: Wards Intelligence • Following the announcement of the UAW strike, the International Brotherhood of Teamsters stated that they would stand in solidarity with the UAW by not delivering vehicles to dealerships as long as the strike continues. This limits GM’s access to its full inventory and ability to sell vehicles.

• The probability of an extended strike lasting longer than a week is increasing as the two parties remain far apart on several key issues. GM believed that their initial offer included a number of concessions that the UAW was seeking. However, their proposal was rejected and a quick resolution does not appear likely at this time.

• Previously, the 1998 UAW strike on GM lasted 54 days and cost the automaker $2 billion, which would equate to $3.1 billion in today’s dollars – or over a third of their 2018 net profit. A strike lasting this long has the potential to cost GM 500,000 units in lost production, which would quickly deplete their available inventory. In this situation, GM intenders would ultimately either delay purchases or move to competitor brands, which could result in 100,000 lost US sales in the remainder of this year.

• A strike of that magnitude would impact the build-outs and start-ups of models, including the Chevrolet Corvette, Cadillac CT5 and Cadillac CT4. Model year changeovers could be delayed, as GM would need to continue to utilize the inventory of parts for outgoing models. In the case of the much anticipated new mid-engine Chevrolet Corvette, retooling at the Bowling Green plant is planned to begin in early October, with the start of production set to begin in early December. An extended shutdown could push out the start of production to January 2020.

About LMC Automotive

LMC Automotive is the premier automotive forecasting company and has an exclusive focus on the industry and an understanding of the dynamics that drive it. With offices in Oxford, Detroit, Shanghai, Bangkok and representation in Germany, Brazil, Japan and Korea, we combine more than 30 years of experience in macroeconomics and demand analysis, with a global network of ground-level, intelligence-gathering expert analysts creating unique perspectives and insights. We help our clients make sense of what is happening today, while planning for tomorrow.

LMC’s principal area of activity is the global forecasting of vehicle sales, production and powertrain and coverage is provided of both Light and Heavy Vehicles.

The automotive industry is facing an extraordinarily rapid period of technology evolution, particularly in the area of alternative propulsion systems. LMC is taking the lead in the analysis of the impact of these changes and is unique in offering several services that specifically forecast future demand and production for hybrid, electric and fuel cell powered vehicles.

Our core services include:

• Global Automotive Production Forecast (monthly) by model, plant, platform, SOP/EOP with a 7-year forecasting horizon • Global Automotive Sales Forecast (monthly) by model, bodytype with a 12-year forcasting horizon • Global Light Vehicle Powertrain Forecast (quarterly) by model, engine (IC, BEV, etc), transmission, driven wheels with a 7-year forecasting horizon • Global Hybrid & EV Forecast (quarterly) sales by model and propulsion system with a 12-year forecasting horizon; optional Battery & eMotors Module (model level, xHEV technologies)

Special Reports

• Long-Term Outlook for AV and Electrification to 2050

For more information about LMC Automotive, visit www.lmc-auto.com or email us at [email protected].

Focused ▪ Flexible ▪ Responsive ▪ Smart For experts by experts

Oxford +44 1865 791737 [email protected] Detroit +1 248 817-2100 Bangkok +662 264 2050 lmc-auto.com Shanghai +86 21 5283 3526