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]

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