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GM strike talks hit a snag
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June 16, 1998: 4:24 p.m. ET
Soaring costs aside, a quirky calendar may prevent quick end to walkouts
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NEW YORK (CNNfn) - What price principle?
For General Motors' hobbled North American operations, the answer could be as much as $500 million a week if the work stoppages that already have gripped 17 assembly plants and idled 71,700 hourly workers -- not including the 9,200 strikers themselves -- spread to the carmaker's remaining facilities.
For the 3,400 striking United Auto Workers at a sheet-metal stamping plant and 5,800 of their brethren at a nearby spark plug and speedometer plant, the walkout means making do on salaries of $150 a week, and flickering hopes that their cause will win out at the negotiating table.
The ripple effect continued Tuesday as a truck plant in Shreveport, La., shut down and a Cadillac assembly plant in Detroit sent home 1,540 workers. Analysts expect most of GM's North American manufacturing facilities to be shut by the end of this week because of a lack of parts.
Whichever side prevails -- and at whatever cost -- a number of factors are weighing against a speedy settlement, not the least being GM's apparent readiness to sacrifice short-term profits for greater efficiency down the road.
But that boardroom about-face aside, analysts say the calendar may play an outsized role in determining any outcome, turning the talks into a race against the clock.
One reason is that GM's annual two-week summer shutdown is set to begin at the end of next week. But even if the strike were settled Tuesday, GM would need at least that long to restart operations at its idled facilities.
Reluctant to start plants up again
Given that, analysts say, executives may be reluctant to incur the costs of starting up the plants only to idle them again almost immediately while the workers take their vacation.
GM relies heavily on its profitable line of pickups and sport/utility vehicles, which have been hit hardest by the work stoppages. Technically, GM reserves the option of deferring the shutdown to a later date while it tries to recoup some of its profits, but this would become feasible only in the event the strike ended promptly.
Adding to the sense of urgency, key negotiators from the United Auto Workers are set to attend a national convention in Las Vegas next week. Thus they will be absent from the talks, scuttling any chances for a negotiated settlement during the period of the convention.
"I think the UAW would like to go to the convention next week with the strike out there," said Gary Lapidus, an auto analyst with Sanford C. Bernstein in New York. "They will view it as being in their best interest to have the strike still going on."
Forfeited holiday pay?
At the same time, for the UAW, an extended strike could pose another problem: To receive holiday pay in the first week of the two-week shutdown, the UAW members must work the day before the vacation begins, June 26. Pay is automatically received for the second week, strike or not. Meanwhile, the idled workers at other plants will receive unemployment benefits pending the outcome of the walkout.
Lapidus speculated that GM mangers may hammer out some agreement with UAW negotiators to ensure strikers receive holiday pay in the first week. He predicted the strike likely would stretch until July 13, the day the holiday shutdown ends.
The concessions thus far in the strike, such as a GM decision to return dyes it had removed from the stamping plant, are far overshadowed by the disputes.
The sheer intensity of the emotions on both sides of the negotiating table have kept the workers and management on tenterhooks. In the most serious bargaining-table rebellion so far, negotiators for UAW Local 659, representing workers from the Flint metal-stamping plant, stormed out of talks Monday morning and took their grievances to the local airwaves.
The UAW blasted a GM official for allegedly making light of the $150-a-week salary the workers are receiving during the strike, and suggesting they would be better off back on the job.
"Their attitude is one of arrogance," Local 659 president Duane Zuckschwerdt was quoted as saying.
GM denied the allegations and accused the negotiators of public grandstanding. "This inflammatory account of today's talks is completely fabricated as are earlier accounts of talks over the weekend," GM said in a statement.
Bleeding the production lines
Behind the public vitriol, however, lurk major money issues. The strike has cost GM the production of anywhere from 10,000 to 30,000 cars a day, analysts say, which normally would reap hundreds of millions of dollars in revenues for the company.
As of Sunday, the strikes had caused the shutdown of more than half of GM's North American operations, and some analysts predicted a total halt to operations could loom as early as Friday, barring a settlement.
The losses are starker given GM's insistence that this strike is about whether it will maintain its leading position in an auto market that has seen its smaller rivals, Ford and Chrysler, gain ground fast by slashing costs and streamlining operations.
The UAW contends the walkout is really aimed at forcing GM to stanch the flow of jobs to Mexico, where cheaper labor makes assembly less costly. GM has reduced its work force by 10,000 workers annually, with most of the cuts coming through attrition. But it still is bloated, by many industry standards, at 218,000.
From 1968 through the first five months of 1998, GM has seen its market share drop from 46.5 percent to 30.9 percent. Ford, by contrast, controlled 30.7 percent of the market, and Chrysler 16 percent, in the first five months of the year. GM also requires more workers (3.6) to build each car than Ford (3.1) or Chrysler (3.3).
After 12 days, the strike has cost GM $230 million, Lapidus said. The toll could mount to $330 million by Friday and $350 million next week, assuming all GM plants are idled. Echoing a common view, Lapidus said GM could hardly afford not to hold out in this strike if it hopes to be sleeker and more efficient in the future.
Shares of GM (GM) were trading up 7/16 at 68-13/16 late Tuesday afternoon.
-- from staff and wire reports
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