Nemak said the company's third-quarter earnings before interest and taxes fell 13% to $ 139 million. Nemak's third-quarter operating income was $ 963 million, a 16% decline from the same period last year to $ 1.15 billion.
According to foreign media reports, Mexican auto parts supplier Nemak said on October 18 that the United Automobile Association (UAW) 's strike against General Motors has lasted for one month, and this also affected its third quarter. The production of parts and components and operating income have an adverse effect.
Nemak is responsible for supplying aluminum components for powertrain and body architecture to global car companies. Since the strike, GM has reduced engine block production by 100,000 units in the third quarter, a total of 400,000 units.
Nemak CEO Armando Tamez said in a conference call on Friday that during the disruption of North American production, UAW's strikes on wages and job security put the company under tremendous cost pressure. Tamez revealed that Nemak had stopped producing and supplying parts for General Motors when the strike began on September 16. In addition, in addition to reduced production, Tamez said the strike could cost the company between $ 8 and $ 12 million.
Nemak said in its report that the company's third-quarter earnings before interest and taxes fell 13% to $ 139 million. Nemak's third-quarter operating income was US $ 963 million, a 16% decrease from the same period last year to US $ 1.15 billion. Nemak believes that this is mainly due to reduced output and fluctuations in aluminum prices. Nemak said its total production in the third quarter fell 14% from the same period last year. The company believes that its decline in North American output is mainly due to the lack of a good product mix, reduced exports to China, and reduced production from the Detroit Big Three.
GM's strike has also negatively affected other major component suppliers, including Andorra and Virginia. GM and UAW have reached a new four-year labor intent agreement, but it may take another week to adjust and during this period, workers will continue to strike. Tamez said: "We are ready, all our production plants are ready to start production at any time. We hope to have results in the next few days." Tamez said that once the contract goes into effect, Nemak and GM will be in the rest of the year And the first quarter of next year will resume production as much as possible.
Other labor issues
In addition, problems with Nemak's internal labor agreement also made it challenging in the third quarter. The Nemak Ontario Windsor factory is inefficient due to its small area.The company intends to close the factory and invest in other plants for expansion. Protests were organized during the period.
Nemak plans to close the plant in mid-2020, but union workers have organized strikes at the plant for up to two weeks before the framework conditions such as negotiation time and instant arbitration procedures are met. Tamez said Nemak has initiated a negotiation process with Unifor to work out an exact solution to the Windsor plant's problems.
In addition, Nemak said it has secured a new partnership that will bring in $ 240 million in value to its annual revenue. The contract will be mainly responsible for the production of cylinder heads, engine blocks and electric vehicle components.