Posted on 09/25/2007 4:20:36 AM PDT by decimon
DETROIT - If the United Auto Workers strike against General Motors Corp. lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, according to several industry analysts. ADVERTISEMENT
A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation, Lehman Brothers analyst Brian Johnson said Monday in a note to investors. But a longer strike would be harmful, causing GM to burn up $8.1 billion in the first month and $7.2 billion in the second month, assuming the company can't produce vehicles in Mexico or Canada, Johnson wrote.
Initially, the strike wouldn't have much impact on consumers because GM has so much inventory, the analysts say. The company had just under 950,000 vehicles in stock at the end of August, about 35,000 less than at the same time last year.
But Tom Libby, senior director of industry analysis for J.D. Power and Associates, said even a short strike could hurt GM because its new crossover vehicles — the Buick Enclave, GMC Acadia and Saturn Outlook — are selling well and in short supply.
"The momentum they've established for those products would be interrupted if there's a supply interruption," Libby said.
GM had about a 65-day supply of cars and trucks as September began, versus a 71-day supply at the same time last year, said Paul Taylor, chief economist for the National Automobile Dealers Association. The Enclave, he said, is at a tight 24-day supply.
It was unclear what would happen to vehicles that were en route to dealers. The Teamsters transportation union said its 10,000 automotive transport members would not cross UAW picket lines.
The strike will cost GM about 12,200 vehicles per day, according to the auto forecasting firm CSM Worldwide of Northville. If the walkout goes beyond 36 hours, CSM expects vehicle production in Canada to be affected because of a lack of U.S.-built engines and transmissions.
The strike began at 11 a.m. EDT Monday when 73,000 UAW members at about 80 GM facilities in the U.S. walked off their jobs. Talks resumed a short time later as sign-carrying picketers marched outside plant gates, but weary bargainers stopped to rest around 8 p.m. Negotiators were to return Tuesday morning for their 22nd straight day of bargaining.
Union President Ron Gettelfinger said the company wouldn't budge on guarantees of new vehicles for U.S. plants that would preserve union jobs. But he said the UAW is willing to bargain on the issue of the union taking over retiree health care obligations.
"Job security is one of our primary concerns," Gettelfinger told reporters Monday after talks broke off and the strike began. "We're talking about investment and we're talking about job creation" and preserving benefits, he said.
Striking workers will receive $200 a week plus medical benefits from the UAW's strike fund, which had more than $800 million as of last November, according to the UAW's Web site.
The UAW, Gettelfinger said, is willing to talk about taking money from the company to form a retiree health care trust, something he said the union proposed and the company rejected in 2005.
GM wants the trust, called a Voluntary Employees Beneficiary Association, or VEBA, so it can move much of its $51 billion in unfunded retiree health care liabilities off the books, potentially raising the company's stock price and credit ratings. It's all part of GM's quest to cut or eliminate about a $25-per-hour labor cost disparity with its Japanese competitors.
"This strike is not about the VEBA in any way, shape or form," Gettelfinger said. "We were more than eager to discuss it," although he said no agreement had been reached.
David Cole, chairman of the Center for Automotive Research in Ann Arbor, said before the strike began that the UAW leadership may need a walkout to show members that it did all it could to get the best deal.
"They're in a bit of a box, in that they need some drama to get an affirmative vote on this," he said.
GM spokesman Dan Flores said the automaker was disappointed in the union's strike decision.
"The bargaining involves complex, difficult issues that affect the job security of our U.S. work force and the long-term viability of the company," he said. "We remain fully committed to working with the UAW to develop solutions together to address the competitive challenges facing GM."
GM shares fell 20 cents to $34.74 Monday.
The UAW picked GM as the lead company and potential strike target in labor negotiations with the Detroit Three automakers that began in July. An agreement between GM and the UAW would become the pattern for pacts with Ford Motor Co. and Chrysler LLC, which have indefinitely extended their contracts with the union.
A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation...
Hmmm...
Two weeks is not a strike, try eight.
Say the strike goes to four weeks. That might cost GM some money up front but they would likely save more long-term if that saves them from some onerous union contract.
$30.00/hr to watch robots do your job? Get a life!
Hmmm....when will the strike by Toyota, Nissan, and Hyundai workers begin?
(/sarcasm)
But is it not glaringly obvious that the union doesn’t care at all about its membership and if they actually have jobs to come back to after a strike? Isn’t the unemployment rate in Michigan among the highest in the country? Doesn’t make much sense, does it?
Union thug extortioners at it again. Striking you employer who is bleeding cash already is not the brightest idea I have ever heard.
It’s time for the GM to play hardball with the union.
"Do you expect me to talk, Gettelfinger?"
"I expect you to die, Mr. Detroit."
They never have before ... hardball means breaking the union ... make them renegotiate recognition and dues check-off ... they also have to stop the moronic practice of letting retirees vote on a contract which just keeps pumping money into benefits for themselves
GM should just take a year off and wipe the slate clean
It's time to re-tool the relationship with the union actors
.
Yeah - - President Reagan took care of the Air Traffic Controller problem simply and quickly.
Mr. Middlefinger: “There is no job security in this world. Get real!”.
I could see GM turning into only three divisions:
1. Chevrolet--family cars based on Opel/Vauxhall European division designs plus Corvette.
2. Cadillac--small to large luxury vehicles, including more sporty models.
3. GMC--light trucks and SUV's.
By removing the Buick, Pontiac and Saturn brand names and simplifying the product line, GM could save billions of whatever currency (US dollar or Euro) per year.
That might sound practical, but there's a flip side to that. If retirees are not included in the contract process then they'll be tossed aside by the current workers. There may be some advantages to that, but the ongoing scandal involving a disgraceful disability insurance process for National Football League retirees is a good example of what happens when a union negotiates only on behalf of current active members.
Ford and GM can't make a small car her in the U.S. with total compensation of $71/hr. vs. $48/hr for the Japanese plants here in the U.S.
The Union knows the jig is up, Bankruptcy, was discussed openly in the Detroit local or auto-centric press a few years back before the national press caught on, the UAW knows as well Ford bet the farm and has a 30 billion dollar collateral loan against company assets.
They darn well know they care going to have to cut total compensation by 1/3 to keep the jobs. I can't help but wonder if this is boob bate for bubba's to keep the rank and file still believing the Union mantra.
Without getting into the particulars, I have heard of small cars being canceled because enough content couldn't be taken out to make any money on it since labor cost were so high.
I have a theory why the UAW is pushing the jobs issue so hard.
The Chevy Volt will be a paradigm changer, if you look at the platform with no transmission and the almost all drivetrain for that matter can and will be purchased from vendors. This platform is scale-able, so going forward, the number of line workers to assemble Series-Hybrids, may be much less. They want guarantees to offset this, that is impossible, but they are going for it anyhow, or again they are doing it for the edification of the rank and file.
- I think GM has a long term strategy which involves upgrading it’s North American facilities to go ever more robotic (slowly reducing it’s workforce) while at the same time either subcontracting out material purchases or building facilities in third world countries to take advantage of low labor costs.
With this approach, the North American unions will gradually decline in membership to the point where a strike will be more of an inconvenience than a disruption.
“$30.00/hr to watch robots do your job? Get a life!”
No kidding. An get some skills, too!
Bad idea. GM’s Saturn division is on a roll with the Outlook and the Aura. Pontiac and Buick are starting to surge with good product such as the Enclave and upcoming G8. Your dealer network would take 5 to 10 years to fall into line with your plan.
Besides, a reorg as you describe would affect mostly non-union, white collar sales and marketing jobs.
Union A-holes: Just when GM is starting to roll again, they reach out and bite the hand that feeds them. As it is, GM is ramping up engine manufacturing in China, and we’ll soon be seeing Shanghai GM manufactured cars on our roads.
The UAW is doing it’s best to turn GM into the Mattel and Hasbro of the automobile industry; Design, Sales, Marketing, and distribution in the US; All manufacturing overseas.
Whether you are right or wrong in particulars, you are right about changing times. My career job was based on equipment that barely exists today. You change with the times or you die in your time.
Last paragraph says it all...
Ouch... I just don’t see that happening, although I don’t necessarily think it is a bad idea.
GM saved a bunch by cutting Oldsmobile (as much as I hated seeing that). But I have never understood the business model of selling 3 differently branded versions of the same vehicle. At least now it is down, in most cases, to two.
And anyone who buys a “Chevrolet” or “GMC” truck because it is better than the other is an idiot. They are 99% identical. 100% of the 1% difference is visual - generally a different grill and badging. They are manufactured in the same plants from the same parts bins (my best friend’s uncle bought a Chevrolet Sierra about 10 years ago... actually it was a GMC on one side and a Chevrolet on the other - brand new from the lot... GM wanted the truck back).
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