The Ontario auto parts manufacturer Linamar Corp. says it is losing up to $ 1 million a day as the economic damage increases due to a strike by 49,000 workers of General Motors Co. in the United States who is approaching the end of his third week.
US GM employees, members of the United Auto Workers, left work on September 16th, causing nearly all of GM's automotive production in North America to be disrupted, causing thousands of layoffs in southern Ontario and falling. of orders to GM suppliers Linamar, Martinrea International Inc., Magna International Inc. and others.
"It is estimated that the subsequent decline in GM orders has an impact on Linamar's earnings at a [daily] rate of up to $ 1 million," Linamar said in a brief update of market conditions issued Wednesday.
Linamar is headquartered in Guelph, Ontario, and produces transmission, transmission, chassis and other components. Thursday its share price fell 10% on the Toronto Stock Exchange.
The company employs 28,000 people in 61 factories and 35 sales and research sites in Canada, the United States, Mexico, China and other countries. The automotive market accounted for 68% of total sales of $ 7.6 billion for 2018. Linamar also produces industrial and agricultural equipment.
"The strike is hitting us, of course, as long as it continues," CEO Linda Hasenfratz stated in an e-mail on Thursday. "We hope to see some volume recovery after GM returns to work to recover the exhausted inventories."
He refused to say how many people Linamar fired because of the strike, noting that it changes as they are reassigned to the company.
Most of Linamar's Canadian production is shipped to US factories, Hasenfratz said, adding that the company does not serve GM's Oshawa assembly lines, which should close in December.
Auto parts manufacturers in Ontario employ around 100,000 people and sell $ 18 billion of components to US manufacturers. GM is a big customer for companies in Ontario and elsewhere.
The US strike by the UAW has closed more than 50 factories and warehouses in the United States. GM's operations in Ontario soon followed, due to the interconnected nature of self-production.
Production stopped in two of the three GM factories in Ontario. About 2,000 hourly workers have been laid off at the Oshawa plant, which produces Chevrolet Impalas and GM pickup trucks. Engine production at the St. Catharines propulsion plant has stopped, putting 700 workers on temporary redundancy.
GM's Ingersoll plant, which produces the Chevrolet Equinox SUV, is closed this week for the planned inventory management. The move, announced in the summer, laid off 2,300 workers at Ingersoll and 300 transmission assemblers in St. Catharines, said Jennifer Wright, a spokeswoman for GM.
Ms. Wright said the arrests in Ingersoll and the St. Catharines transmission line are not linked to the strike, and that both sites are scheduled on Monday.
The number of temporary layoffs at GM suppliers is not known, but it is believed to be in thousands. Unifor, the union that represents GM workers in Ontario, said 1,700 members were sent home by the companies that serve the Oshawa plant. The list of companies that have laid off workers includes Lakeside Plastics, Martin Transportation Systems Inc., Lear Corp., Ceva Logistics, Syncreon and Oakley Industries.
The UAW, which seeks better wages, job security and work for unused US facilities, said Tuesday that it had rejected GM's latest offer as insufficient.
JPMorgan analyst Ryan Brinkman said in a research note that the strike has already cost GM over $ 1.1 billion and the Detroit-based carmaker loses $ 82 million every day it drags on.
The price of GM's shares has fallen by about 13% in New York since the start of the strike, compared to a 4% drop in the US stock index of reference, the S & P 500.
Martinrea's share price fell by almost 4% on Thursday, bringing the decline to 13% from the start of the GM strike. The price of Magna shares fell by more than 1% on Thursday, with a drop of around 5% from the beginning of the strike.
Linamar's update included warnings of slowing sales in its other two markets, construction equipment and agricultural machinery, due to global commercial uncertainty and a decline in corporate spending. In the automotive market, Linamar noted that IHS Markit Ltd.'s global vehicle production forecasts for all manufacturers in the third quarter were reduced by 1.1 million units to 21.2 million.
Peter Sklar, an equity analyst with the Bank of Montreal, stated that investors overreacted to the Linamar impact on the impact of the strike. He stated that he had reduced Linamar's expected profit for the third quarter by 26 cents per share, bringing the impact of the strike to 13 cents per share, or $ 13 million.
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