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Report: GM can cope with a short strike
Investors and industry pundits don't believe the UAW strike will last long, proving their belief with a slight drop of $0.20 in GM's stock price. Widespread belief is that GM could handle a two-week halt in production without devastation to its balance sheet and recovery plan. GM's got three months of inventory on hand, and GM had planned to cut production by 10-percent in Q4 anyway. The only hitch could be with popular vehicles like the Enclave and Acadia, which typically spend just two weeks on dealer lots.
It's estimated that Toyota, Honda, and Nissan have a $1,000 advantage per vehicle, and one commenter said that analysts are happy to see GM take a hard stance in light of the necessity of gaining on the Japanese three. Other analysts were, of course, varied in their take on the impact: while two weeks is seen as acceptable, according to one analyst, a four-week stoppage would cost GM $4 billion and send GM into bankruptcy. S&P, though, thinks GM has $32 billion in cash, and Moody's thinks the company has enough to last four weeks.
The UAW doesn't want to look like it's shooting itself in the foot and GM in the head, but it does have its active members and retirees to worry about. GM, though, with a more global operation, has a much better position in terms of time, patience, and clout to wait for the deal it wants. As David Cole with the Center for Automotive Research said, "It's unimaginable that it would be a long strike -- absolutely unimaginable. The stakes are so high."
[Source: Detroit News]
Reader Comments (Page 1 of 1)
Alex 5:32PM (9/25/2007)
the union won't be able to hold out for long. the rank and file can't afford it and they'll start cracking. this was a major mistake by the UAW.
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Jesus Christ 5:05AM (9/26/2007)
Lets hope they hold on and fight. I would rather a few thousand families get a better living than one Generally Malevolent company pocket a few extra billion bucks. That really is what its about. Working families over corporate profiteering. I wonder how many of you cheering slaves have health care or pensions?
STEEEERRRRRIIIIIIIIIIIKKKKKKEEEEEEEEE!!!!!
JT 5:34PM (9/25/2007)
IN THE PAST UNIONS WERE GOOD.........THIS IS NO LONGER THE CASE! TOYOTA/HONDA DO NOT CARRY THE OVERHEAD OF PENSIONS AND HEALTH CARE AS DO GM/FORD/CHRYSLER. IT'S TIME TO CLEAN HOUSE. DUMP THE UNIONS. PAY THE SAY LOW WAGES AS TOYOTA DOES......WHICH WILL LOWER THE PRICE OF THE PRODUCTS.....LIKE TOYOTAS........SINCE THE CURRENT GENERATION SEEMS TO BE BUYING IMPORTS WHY SHOULD GM/FORD/CHRYSLER PAY FOR THERE PARENTS AND GRANDPARENTS ANYMORE? THE NEW GENERATION IS ALL ABOUT THEMSELVES...IMAGE..BUY AN IMPORT.....DRUMP THE UNIONS....OFFER SCAB WAGES AND SOMEONE WILL TAKE THE JOB. THEN WERE ALL ON THE SAME PLAYING FIELD AGAIN.
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naggs 7:11PM (9/25/2007)
i understand why the unions are doing what they are doing but i agree. it is necessary to break the UAW. they need to give more or they will all be out of a job. im sure there are plenty of people in michigan who would be glad to do the same low skill labor for $15 an hour with or without healthcare.
its unfortunate but compare the pressure the UAW is putting on GM to the pressure the competition is putting on GM. its a rock and a slightly less hard place. GM has been getting squeezed but something has got to give.
d_x 7:36PM (9/25/2007)
We could see that...but how about those at the upper levels getting multi million dollar bonuses when the companies lose millions of dollars per year?
Judy Zik 10:05PM (9/25/2007)
Enough with the screaming JT!
1) Toyota's are more expensive to buy than the domestics.
2) Toyota and Honda both pay similar wages as the domestics when you consider the cost of union dues.
3) The whole idea of a pension system is that you pay in enough over the time you work there to pay for your own coverage when you retire. It would seem a previous generation of workers and the employer were not paying enough.
I love when people talk about this young generation being all about themselves. We inherited huge government deficits and a polluted environment because the previous generation used and spent more than their share. Now apparently the supply of oil is about to go bust and we have to get a deficit and debt under control while government programs are being cut and kids are going to school in portables.
In a previous generation's time Television sets here in North America were made here. However cheaper better quality TV's arrived from Japan and the rest is history.
I don't care what industry it is or what year it is. Consumers will not pay more for an inferior product because someone in their country made it. Maybe a few will but most wont. We all just work to hard for too little to pay a premium for lessor quality. The car makers are listening and starting to turn the corner on quality but the union needs to get onside. Real improvement is needed not flag waving and finger pointing.
RicardoHead 5:48PM (9/25/2007)
With all those UAW workers sitting around with nothing to do, now is a good time to buy Frito Lay and Beer stocks.
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Mogg 6:54PM (9/25/2007)
Apparently you don't watch many of these guys at work. They often look like they have nothing to do while they are there anyways.
Tom 5:56PM (9/25/2007)
I hope they all lose their jobs. this is rediculous!
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Murphy 6:08AM (9/26/2007)
that was an extremely ignorant comment. you hope we all lose our jobs. These are people with families and homes.
I am a proud UAW member. I don't want to strike but I also don't wanna go back to the same job I've been doing for years for less money and worse benefits. I don't wish that on anyone. One thing you guys don't seem to understand is that toyota, honda, nissan, etc are hoping the union gives in as well. No matter how low Ford, GM, and Chrysler lower their wages it doesn't matter. the jap companies don't need to negotiate they will just lower their wages in return. the only reason they pay as well as they do now is to keep the unions out.
We have several people that work at the Ford plant I work at that have worked for Toyota in the past. Most were unjustly fired simply because they had too much seniority. The longer you work at a non-union shop the larger the target gets on your back. Maybe unions aren't needed in some jobs but the automotive industry definitely is still in need.
The Penguin 6:08PM (9/25/2007)
If it wasn't for imigration laws GM could replace every worker than went on strike in a few weeks. The ammount of time that it would take to train the workers would easily be ofset by the savings in lower salaries and not having to deal with any of these stupid unions.
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J M C 3 6:22PM (9/25/2007)
As an American I'm grieved by the greedy way unions are cannibalizing US industry.
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David 7:09PM (9/25/2007)
I agree union's had been good back in the early part of the 20th century but today they need to be a more flexible in regards to the company. I always hear that they made America blah, blah. Well they might of made America but they are destroying it by not being flexible with the times. If you don't like it then start your own auto company and pay your employees $45 an hour with benefits. I doubt you last very long.
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Chuck U. Farlie 7:24PM (9/25/2007)
GM Oshawa closed their car facilities today due to lack of parts supply! The truck line can go for another week, maybe two then it's done too. This could have a ripple effect of up to 100 000 auto workers being laid off from various outsourced suppliers. in Canada ALONE! I cannot imagine the grief it must be causing the little guys in the auto sector in the U.S. who aren't a part of the UAW. I know they have to think of their members first, but sooner rather than later concessions must be made for the benefit of the whole auto industry. If GM tanks it will change the very dynamics of any neighbourhood with a auto parts plant or even a GM dealership!
Toyota - Take note of what the UAW could do to you if they infect your places of employment. AND have your bid ready IF GM goes chapter 11 in about five to six weeks time!
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Victor 8:31PM (9/25/2007)
UAW and CAW both must go. They have been killing American manufacturing for too long. At Toyota and Honda every employee is proudly called an associate, stimulating a partnership. At GM, Ford, and Chrysler plants, it us versus them enemies. This type of war-zone psychology results in productivity and quality problems among others. This will not work in modern knowledge-driven workplace. They simply must go.
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Will 12:00AM (9/26/2007)
I don't really like GM products, but i hope they take the UAW and snap its neck right in half.
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justme 5:25AM (9/26/2007)
GM AND UNION SETTLED THERE CONTRACT ......UPDATE.......
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justme 5:29AM (9/26/2007)
Union, GM Reach Tentative Agreement
Union, GM Reach Tentative Agreement
Posted: 2007-09-26 04:46:39
DETROIT (Sept. 26) - The United Auto Workers and General Motors Corp. said Wednesday they have reached a tentative contract agreement that ends a two-day nationwide strike immediately.
The historic agreement would shift the burden of retiree health care from GM to the union and give workers bonuses and lump-sum payments.
The union said the deal was reached shortly after 3 a.m.
The contract must be reviewed by local UAW presidents and will then be subject to a vote of GM's 73,000 rank-and-file members. The agreement is expected to set a pattern for contracts at Ford Motor Co. and Chrysler LLC.
The deal means UAW will tell workers to head back to their jobs at around 80 GM facilities across the nation. The union went on strike at 11 a.m. Monday when talks broke down.
The agreement includes GM's top priority in the negotiations - shifting most of its $51 billion unfunded retiree health care obligation to a UAW-run trust. The company would pay about 70 percent of the obligation into the trust, called a Voluntary Employees Beneficiary Association, or VEBA.
The union would then invest the money and take over health care responsibilities for about 340,000 GM hourly retirees and spouses.
"I'm pleased to say that we have a VEBA in place that will secure the benefits of our retirees," UAW President Ron Gettelfinger said at an early morning news conference inside the union's Detroit headquarters.
Gettelfinger said he's confident of ratification and that voting likely will start as soon as this weekend.
Union leaders will be briefed on Thursday and Friday, he said.
The UAW also expects to decide Thursday what automaker it will negotiate with next.
"There's no question this was one of the most complex and difficult bargaining sessions in the history of the GM-UAW relationship," Rick Wagoner , GM chairman and chief executive, said in a statement.
The strike also affected GM plants and suppliers at locations where workers are not represented by UAW.
On Tuesday, GM idled two car assembly lines employing about 5,600 people at its plant in Oshawa, Ontario. On Monday, it idled a transmission plant in Windsor, Ontario, that employs 1,300. Workers at both plants are represented by the Canadian Auto Workers union.
Parts shortages forced GM to cancel one shift Tuesday at a Moraine, Ohio, assembly plant that makes sport utility vehicles. The plant's 2,300 workers are represented by the International Union of Electronic Workers-Communication Workers.
Delphi Corp., GM's largest supplier, said Tuesday it was temporarily laying off workers. Spokesman Lindsey Williams wouldn't give numbers because the situation was in flux. Delphi has about 25 U.S. plants that supply parts for GM.
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DCragTop 8:45AM (9/26/2007)
dang...they settled before I had a chance to comment???
That's so like them!
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