The ongoing labor dispute between the UAW and GM cut net sales by 2.5% for Milwaukee-based Strattec Security Corp., which makes mechanical and electrical locks and keys, door handles and other automotive products.
The company estimated the UAW strike, which started on Sept. 15, cost it around $3 million in net sales during the quarter, which ended Sept. 29.
Despite the drop, the company reported a 2.4% increase in net sales to $120 million. Net income declined from $3.5 million to $1.24 million and earnings dropped from 93 to 33 cents per diluted share.
Strattec attributed most of the earnings drop to a non-cash compensation charge related to shift of funds from its terminated pension plan to a defined contribution plan.
“While the non-cash compensation expense charges and UAW/General Motors strike are having a negative impact in this quarter and the upcoming quarter, we are pleased with our improving manufacturing efficiencies, particularly in the ramping up of our Leon, Mexico facility,” said Frank Krejci, president and CEO of Strattec.
Sales to GM were actually up in the quarter from $25.3 million last year to $33.8 million this year with higher production volumes.
Revenue from Fiat Chrysler Automobiles declined from $30.3 million to $25.8 million as production volumes declined.
The company’s adjusted gross profit margin increased from 13% to 14.3% due to improvements at the Leon paint and assembly plant, even as the increase in the increase in the Mexican minimum wage cut into profits.