Jeff Kowalsky / European Pressphoto Agency
United Auto Workers members picket outside General Motors' truck assembly plant in Pontiac, Mich.
From picket lines in Michigan to dealerships in California, one question hangs over the strike against General Motors Corp.: How long?
The strike, which began Monday morning after contract talks fell short of a union-imposed deadline, could threaten GM's fledgling turnaround and the weakening U.S. economy.
It also could hurt the United Auto Workers, which is gambling that the first major work stoppage to hit the U.S. auto industry in nine years can force GM to grant concessions without pushing it over the financial cliff.
Some observers predicted the strike wouldn't last long. "My feeling is that the two sides are pretty close and this (the walkout) was pretty much a theatrical gesture by the union to get the company to budge," said David Healy, an analyst at Burnham Securities.
The automaker seemed to expect a brief disruption, instructing dealers to continue with a sale that began last weekend and is scheduled to run through Oct. 1.
"They told us the discussions were going very well last night, and they are still very optimistic that they can resolve this in a short period of time," said Leo Bunnin, who owns seven GM dealership in Southern California, after a mid-day conference call with GM executives.
Wall Street has been betting on an accord, pushing GM's stock up almost 19 percent in the past two weeks. The stock dipped slightly Monday, when the overall market was down.
But the talks between the company and the union, which represents 73,000 GM workers, continued into the evening Monday with no resolution to key issues.
Although details of the deadlock were sketchy, a key difficultly has been figuring out how to pay for ballooning health- care benefits for approximately 339,000 former GM workers and spouses.
A disagreement over job security -- crucial to the union as GM slashes thousands of workers from its payroll as it restructures -- was the final spark.
"We were very disappointed in this round of negotiations to discover as we moved forward that it was a one-way set of negotiations," UAW President Ron Gettelfinger said. In a statement, GM said it was "disappointed in the UAW's decision to call a national strike."
GM, Ford Motor Co. and Chrysler have an estimated $90 billion in unfunded retiree health- care obligations on their books. A major goal of the three in the current round of labor talks is to set up a fund that will take over those obligations and make the union responsible for future benefits.
All three UAW contracts expired Sept. 14, al though negotiations on a new pact began in July. The UAW extended the deadlines for Ford and Chrysler and is focusing on its contract with GM because it is seen as the most financially stable of the Big Three.
The union strategy is to make a deal with GM and then impose the same terms on the other two.
GM is No. 3 in the Fortune 500 ranking of the biggest U.S. corporations -- behind only Wal-Mart Stores Inc. and Exxon Mobil Corp. But its ranking as the world's largest automaker is under assault by Japan's Toyota Motor Corp., and its share of the U.S. market is down to 23 percent from 44 percent in the late 1970s.
By striking at GM, the UAW is taking a calculated risk.
"The union doesn't want to get blamed for a bankruptcy," said Ken Elias, a partner in the consulting company Maryann Keller and Associates. "It doesn't want to look like it's putting GM, Ford or Chrysler at a competitive disadvantage."
It's a particularly sensitive time for the UAW, which is trying to organize workers at Asian automakers' plants in the U.S. Analysts said the union couldn't risk appearing reckless. As it is, the UAW is struggling to maintain job security for its membership, which has shrunk from about 1.5 million in 1979 to a third of that today.
And it's a crucial time for the U.S. economy, which is facing a credit crunch and a slowdown in the housing market. Although a prolonged work stoppage could squeeze economic growth, especially in the industry's Midwest heartland, GM and other Detroit automakers don't wield the make-or-break economic clout they once held.
The last time a strike in the auto industry contributed to a national recession was in 1970, said John Lonski, an economist with Moody's Investors Service.
"It underscores the degree to which the UAW has lost its market power" as GM's share of the national gross domestic product shrinks, Lonski said.
Despite GM's diminished importance to the economy, it directly employs about 280,000 people and thousands more through its network of independent parts suppliers.
"While it (a long strike) may not be enough to push the U.S. into a recession," Lonski said, "it definitely will make it more difficult to avoid an economic slowdown."
The strike came as GM was showing signs of recovering from the slump that had driven the Big Three to cut jobs as they lost market share to Asian rivals. GM reported surprisingly strong August sales last week and was widely considered to be ahead of Ford and Chrysler in rebuilding its business.
"There's never a good time for a strike, but this in particular is a bad time," said analyst Shelly Lombard of the research company Gimme Credit. "They're only about a third of the way through their turnaround, and m anagement doesn't need this right now."
A strike would cost GM between $325 million and $350 million a week, according to Healy. GM assembly plants in Canada and Mexico could feel the effects in a matter of days as the supply of parts from U.S. plants dries up. Although GM dealers have enough inventory to last up to three months, some hot-selling models such as the Buick Enclave crossover utility vehicle are in short supply.
The strike, which began Monday morning after contract talks fell short of a union-imposed deadline, could threaten GM's fledgling turnaround and the weakening U.S. economy.
Photo GallerySome observers predicted the strike wouldn't last long. "My feeling is that the two sides are pretty close and this (the walkout) was pretty much a theatrical gesture by the union to get the company to budge," said David Healy, an analyst at Burnham Securities.
The automaker seemed to expect a brief disruption, instructing dealers to continue with a sale that began last weekend and is scheduled to run through Oct. 1.
"They told us the discussions were going very well last night, and they are still very optimistic that they can resolve this in a short period of time," said Leo Bunnin, who owns seven GM dealership in Southern California, after a mid-day conference call with GM executives.
Wall Street has been betting on an accord, pushing GM's stock up almost 19 percent in the past two weeks. The stock dipped slightly Monday, when the overall market was down.
But the talks between the company and the union, which represents 73,000 GM workers, continued into the evening Monday with no resolution to key issues.
Although details of the deadlock were sketchy, a key difficultly has been figuring out how to pay for ballooning health- care benefits for approximately 339,000 former GM workers and spouses.
A disagreement over job security -- crucial to the union as GM slashes thousands of workers from its payroll as it restructures -- was the final spark.
"We were very disappointed in this round of negotiations to discover as we moved forward that it was a one-way set of negotiations," UAW President Ron Gettelfinger said. In a statement, GM said it was "disappointed in the UAW's decision to call a national strike."
GM, Ford Motor Co. and Chrysler have an estimated $90 billion in unfunded retiree health- care obligations on their books. A major goal of the three in the current round of labor talks is to set up a fund that will take over those obligations and make the union responsible for future benefits.
All three UAW contracts expired Sept. 14, al though negotiations on a new pact began in July. The UAW extended the deadlines for Ford and Chrysler and is focusing on its contract with GM because it is seen as the most financially stable of the Big Three.
The union strategy is to make a deal with GM and then impose the same terms on the other two.
GM is No. 3 in the Fortune 500 ranking of the biggest U.S. corporations -- behind only Wal-Mart Stores Inc. and Exxon Mobil Corp. But its ranking as the world's largest automaker is under assault by Japan's Toyota Motor Corp., and its share of the U.S. market is down to 23 percent from 44 percent in the late 1970s.
By striking at GM, the UAW is taking a calculated risk.
"The union doesn't want to get blamed for a bankruptcy," said Ken Elias, a partner in the consulting company Maryann Keller and Associates. "It doesn't want to look like it's putting GM, Ford or Chrysler at a competitive disadvantage."
It's a particularly sensitive time for the UAW, which is trying to organize workers at Asian automakers' plants in the U.S. Analysts said the union couldn't risk appearing reckless. As it is, the UAW is struggling to maintain job security for its membership, which has shrunk from about 1.5 million in 1979 to a third of that today.
And it's a crucial time for the U.S. economy, which is facing a credit crunch and a slowdown in the housing market. Although a prolonged work stoppage could squeeze economic growth, especially in the industry's Midwest heartland, GM and other Detroit automakers don't wield the make-or-break economic clout they once held.
The last time a strike in the auto industry contributed to a national recession was in 1970, said John Lonski, an economist with Moody's Investors Service.
"It underscores the degree to which the UAW has lost its market power" as GM's share of the national gross domestic product shrinks, Lonski said.
Despite GM's diminished importance to the economy, it directly employs about 280,000 people and thousands more through its network of independent parts suppliers.
"While it (a long strike) may not be enough to push the U.S. into a recession," Lonski said, "it definitely will make it more difficult to avoid an economic slowdown."
The strike came as GM was showing signs of recovering from the slump that had driven the Big Three to cut jobs as they lost market share to Asian rivals. GM reported surprisingly strong August sales last week and was widely considered to be ahead of Ford and Chrysler in rebuilding its business.
"There's never a good time for a strike, but this in particular is a bad time," said analyst Shelly Lombard of the research company Gimme Credit. "They're only about a third of the way through their turnaround, and m anagement doesn't need this right now."
A strike would cost GM between $325 million and $350 million a week, according to Healy. GM assembly plants in Canada and Mexico could feel the effects in a matter of days as the supply of parts from U.S. plants dries up. Although GM dealers have enough inventory to last up to three months, some hot-selling models such as the Buick Enclave crossover utility vehicle are in short supply.
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Come Together and Create!Peter S. Lopez ~aka:Peta
Sacramento, California, Aztlan
Email: sacranative@yahoo.com
http://groups.yahoo.com/group/Humane-Rights-Agenda/
Sacramento, California, Aztlan
Email: sacranative@yahoo.com
http://groups.yahoo.com/group/Humane-Rights-Agenda/
C/S
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