Waiting, but set to strike GM-UAW talks continue past midnight deadline

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A short strike wouldn't cause GM too much financial pain,
analysts say.

STAFF/WIRE REPORTS

Union leaders at General Motors' Lordstown complex were waiting, yet ready to go on strike Friday night if a walkout was called by negotiators in Detroit.

"We are already set," said Jim Graham, president of United Auto Workers Local 1112. "Everything's in motion for a strike deadline tonight [Friday] at 12 o'clock, and we will do what the international tells us to do."

The UAW has selected GM as its lead company in negotiations with the Big Three Detroit automakers, which made it the union's strike target.

Negotiations were under way Friday afternoon ahead of the midnight deadline to agree on a new contract, GM spokesman Dan Flores said.

"We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors," he said. "We remain focused on reaching a tentative agreement as soon as possible."

Union officials had been told to expect a telephone call from Detroit about 10 p.m. telling them whether they should strike or stay on the job — but the announcement was delayed and no new information was available at press time this morning. Some local union officials said that was because of developments at the bargaining table. The officials requested anonymity because the talks are private.

Industry experts have said this week that they expect talks to be extended past the deadline if an agreement isn't reached.

Graham didn't want to reveal what he has been hearing on negotiations.

"We're not making any more comments until we find out what's happening," Graham said.

Concerns for Lordstown

The talks are especially sensitive in Lordstown because the future of the plant is uncertain. GM has committed to building the Chevrolet Cobalt and Pontiac G5 there until June 2009.

Michael Chaffee, mayor of Lordstown, said Friday that there have been rumors that GM Lordstown might land the Volt, an electric-powered car.

Lordstown union leaders also are bargaining a new local labor contract, which covers work rules and other plant-specific items. Union and plant leaders have said the contract is critical to persuading GM to place a new product in Lordstown.

The UAW represents about 2,400 workers at the GM assembly plant in Lordstown, about 1,200 at an adjacent fabricating plant and about 500 in various nearby feeder plants. Local 1112 covers the assembly workers.

Until Thursday, national contract talks appeared to be progressing, but several local union leaders at GM plants said they were to begin strike preparations.

View from analysts

Analysts said a short-term walkout probably wouldn't cause too much financial pain but could hurt the automaker's launch of some critical 2008 vehicles.

GM had a 65-day supply of vehicles at the end of August, slightly lower than the 67-day average for the U.S.-based automakers, according to Ward's AutoInfoBank. Paul Taylor, chief economist for the National Automobile Dealers Association, said the ideal is a 60-day supply, so that indicates GM didn't build up its inventory in anticipation of a strike.

Taylor said a short strike could actually help GM reduce its inventory of pickups. Right now, the Chevrolet Silverado stands at a 90-day supply, higher than the industry average of 81 days for pickups. GM announced last month that it plans to cut 1,200 jobs at one of the plants that makes the Silverado, and a strike could speed that process.

But Taylor said a longer strike, or a strike that could hurt hot-selling vehicles, would be disastrous. The Buick Enclave crossover, for example, has only a 24-day supply and is leading a revival of the Buick brand. Taylor said Asian automakers have enough inventory — an average supply of 45 days — to pick up the slack if GM's supply diminished, which would also hurt the company.

"I see some posturing to let them know a strike is still a tool that can be used, but it's like bleeding both patients in the negotiations with leeches," he said. "It would bleed both sides to death."

Catherine Madden, an auto manufacturing analyst with Global Insight, said GM has done a good job of controlling its inventory this year compared to past years. She fears a strike would hurt the company's rollout of 2008 model year vehicles, particularly the Chevrolet Malibu sedan.

"We're forecasting a very bleak year for 2008, with no growth," she said. "A strike could push things in deeper and exacerbate what's already going to be a difficult year."

Saturday, September 15, 2007