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GM bracing for Delphi strike
Report: GM increases orders, ramps up production in advance of possible strike at parts supplier.
November 4, 2005: 11:18 AM EST

NEW YORK (CNN/Money) - General Motors Corp. is ramping up production despite weak sales to prepare for a possible strike at Delphi, its largest supplier, according to a published report.

A GM spokesman confirmed to the Detroit News that the auto maker is preparing a contingency plan in case 33,000 United Auto Workers union members at its former parts unit walk off the job in December. The world's largest auto parts manufacturer, which filed for bankruptcy court protection in October, has warned the union that without an agreement to cut labor costs by Dec. 16, it will ask the judge in that case to void the UAW contract.

"We are looking at contingency plans and ways to protect our supply," GM (Research) spokesman Stefan Weinmann told the newspaper, declining to elaborate. "Clearly, our priority is to see that everything continues as normal."

Delphi workers and officials with other parts suppliers say GM has boosted orders for parts, forcing some parts plants to run on overtime to keep pace, the News reported. At the same time, the newspaper reports that GM is operating several assembly plants on overtime after increasing vehicle production 8 percent in October despite a 26 percent sales dip.

One vice president for a GM supplier, who asked that his name not be published, told the newspaper, "the volumes are way up. They are higher than we have ever seen them. With the way sales have been, you know something is going on here."

The newspaper reports that United Auto Workers President Ron Gettelfinger wrote that Delphi's demand for huge wage and benefit cuts are a "road map to conflict," according to a letter distributed Thursday to union workers.

Though Gettelfinger has not yet advocated a strike, the newspaper reported, he called a "work to rule" effort, in which workers do the bare minimum of labor required of them, a "good idea," according to the letter.

"We should not do one thing more than what is required," said Gettelfinger's letter, the newspaper reported.

While GM spun off Delphi in 1999, it still depends on the parts maker more than any other supplier for all manner of parts, without the ability to source most of the parts to other suppliers in the short term. A 1998 strike at just two Delphi plants virtually shut down production at GM, and its supply chain is just as vulnerable to a Delphi strike today, according to the newspaper.

GM is looking to launch of some newly designed sport/utility vehicles and pickups to end the weak sales that it has seen the last two months. A strike by Delphi in December could disrupt those turnaround plans by limiting supplies of the new vehicles to dealers and customers.

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For a look at the bankruptcy risk for GM due to the Delphi bankruptcy, click here.  Top of page

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