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The GM Strike Could End Today. Here’s What It Means for Stocks. – Barron’s

Both sides said talks are continuing.

“We are trying to provide a path for our temporary workers to become [permanent] workers,” said UAW vice president Terry Dittes in a recorded message to members on Monday. It also said it raised strike pay for members to $275 from $250l.

“While ratification may take up to an additional week…we estimate GM lost 25 production days, or 250,000 to 200,000 units, representing third- quarter and fourth-quarter drags on North American industry production of 2.5% and 4.4%, respectively,” wrote KeyBanc analyst James Picariello in a Wednesday research report.

The impact on his 2019 earnings estimates range from essentially nothing—in the case of BorgWarner (BWA)—to a 25% cut for American Axle & Manufacturing (AXL). He estimates Axle’s earnings will fall from $1.90 a share to $1.57 a share in 2019 based on the output lost due to the strike. The average impact on parts’ supplier earnings is about 5%; it correlates with suppliers’ overall exposure to General Motors.

Investors should be ready for weak third-quarter earnings when car companies start reporting their numbers next week.

“Many [suppliers] are likely to cut 2019 guidance, [which] investors might look through,” wrote Credit Suisse analyst Dan Levy in a Friday research report.

“Bottom-line, we wouldn’t be surprised if the group rallies on a GM/UAW resolution given some clarity,” added RBC analyst Joseph Spak in a Sunday research report.

GM reports its third-quarter numbers on Oct. 29.

Write to Al Root at allen.root@dowjones.com

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