GM Prepares $6 Billion Line of Credit
The automaker is shoring up liquidity, an indicator that the company fears the strike at its U.S. plants may drag on.
General Motors Co. is setting up a $6 billion line of credit to shore up liquidity, a move indicating the carmaker is preparing for the strike at U.S. plants to drag on, even as the cost of the strike has already reach $200 million.
The Detroit-based company’s move to bolster its financial position was announced in a securities filing early Wednesday. GM wants the 364-day revolving credit line, which will mature on October 1 next year, to maintain operational flexibility, a company spokesperson said.
As of June 30, GM’s total automotive liquidity stood at $38.9 billion, so it’s not at risk of running out of money anytime soon. But the new credit line is a sign GM may be buckling in for a prolonged work stoppage by the United Auto Workers (UAW).
The company has been exchanging offers with the UAW, but its facilities have been targeted for escalating union member walkouts. The strike shutdown a GM plant in Lansing, Michigan, last week that makes the Chevrolet Traverse and Buick Enclave crossover SUV models, after it silenced in mid-September a Missouri plant that builds the company’s Chevy Colorado and GMC Canyon midsize pickups.
Sales of those two truck models fell at least 10 percent in the latest quarter, and the spokesperson said the strike has cost GM $200 million as of last month.
The UAW strike action is also impacting plants operated by GM rivals Ford Motor Co. and Stellantis NV.
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