GM Says Labor Contracts With Autoworkers Will Cost $9.3 Billion, Announces $10 Billion Stock Buyback

General Motors on Wednesday said its new labor contracts with American and Canadian autoworkers will cost $9.3 billion over the life of the separate agreements, even as it announced a $10 billion share buyback program and a 33% dividend hike.

Earlier this month, a majority of the roughly 46,000 American autoworkers represented by the United Auto Workers ratified a more than four-year labor deal with GM after 45 days of unprecedented rolling strikes. More than 17,000 workers had walked off the job, which the carmaker on Wednesday said cost $1.1 billion.

Additionally, the company in October negotiated a three-year labor deal with the 4,300 autoworkers represented by Unifor — Canada's largest private-sector union — after a short strike against its facilities.

That $9.3 billion in costs comes from the significant concessions GM made to the autoworkers in their separate agreements on major issues, such as wages and retirement benefits. Additionally, the company said the contracts will add around $575 in labor costs per vehicle; Ford Motor Co., which agreed to a similar contract with the UAW, has said its deal will add between $850 and $900 per vehicle in labor costs.

GM has struggled to raise its stock over the past year as it negotiated with labor unions, dealt with the growing controversy at its Cruise self-driving unit and delays with its transition to electric vehicles. Over the past 12 months, the company's stock has fallen more than 27%, although shares rose 9% in premarket trading on Wednesday.

GM reduced its expected net income attributable to shareholders to a range of $9.1 billion to $9.7 billion, compared to between $9.3 billion and $10.7 billion. In October, the company withdrew its guidance, citing the UAW's then-ongoing strikes.

“We are finalizing a 2024 budget that will fully offset the incremental costs of our new labor agreements and the long-term plan we are executing includes reducing the capital intensity of the business, developing products even more efficiently, and further reducing our fixed and variable costs,” GM CEO Mary Barra said.

GM earlier this year said it would cut fixed costs by $3 billion by the end of 2024. In a letter to shareholders, Barra on Wednesday said the company would lower spending on Cruise's expansion in 2024 as it focuses on rebuilding trust with government regulators and addresses the division's challenges.

The automaker said its accelerated share buyback program will advance $10 billion to the executing banks and retire $6.8 billion worth of common stock. GM said it will have another $1.4 billion of capacity remaining under its share repurchase authorization for additional buybacks; the program is expected to end in late 2024 and will be executed by Goldman Sachs, Bank of America, Citibank and Barclays.

The company expects to increase its common stock dividend by 3 cents per quarter to 12 cents per share beginning in 2024.

GM also canceled a $6 billion revolving line of credit it had entered into during the UAW strikes and said it plans to enter into a $3 billion credit line with those same banks executing its buyback program.

“With this clear path forward, and our strong balance sheet, we will return significant capital to shareholders," Barra said.