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GM goes on the offensive
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June 17, 1998: 6:00 p.m. ET
Automaker says it won't invest more in Flint plant; offers non-stop talks
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NEW YORK (CNNfn) - Drawing a line in the factory floor, General Motors Corp. broke its silence Wednesday about a 13-day-old strike that has crippled its operations, saying it is unwilling to invest more money in a metal-stamping plant that it considers inefficient and uncompetitive.
In a conciliatory gesture, however, a top GM executive insisted his negotiating team is "dedicated to go around the clock to get a settlement" with the United Auto Workers.
"Quite frankly, we didn't want this strike, but we want it to end," said the executive, David Hackworth, the head of GM's North American car-manufacturing operations.
The remarks drew a swift reply from Danny Thetford, the President of UAW Local 651, which represents 5,800 striking workers at GM's Delphi parts-making plant. The plants makes components such as spark plugs and speedometers that are integral to the assembly of most GM cars and trucks.
"The UAW is ready and willing to meet any time and anywhere," Thetford said.
Thetford said talks with management ended Wednesday with no progress made on any of the substantive issues dividing the two sides.
As the two sides spoke, GM revised, to 76,900, the number of workers idled by the work stoppages at a metal-stamping plant that began June 5 and at a key parts factory where employees walked out last Thursday. That number does not include the 9,200 strikers themselves.
The stoppages have thus far cost GM an estimated $50 million a day, according to analysts who say that the losses could mount to as much as $500 million a week if the strikes lead to the complete shutdown of GM's 29 assembly plants. That may happen as soon as Friday, if the ripple effect of the stoppages continues unabated.
Striking workers are paid $150 a week so long as they spend at least four hours picketing. GM workers average just over $1,050 in regular weekly compensation. But the UAW has $700 million in a reserve fund, ample money to sustain it through even a protracted strike.
The more pressure, the better
Thetford expressed hope Wednesday the work stoppages would induce GM to settle the strike more quickly.
"The more pressure the better as far as I'm concerned," he said. "We're going to make every effort to drive this to a successful conclusion as quick as we can."
The only problem, analysts say, is GM is equally determined to ramp up the pressure on the UAW. The workers are desperately trying to stem the tide of union jobs that GM is shifting to Mexico, where labor is cheaper and more cost-effective.
But GM, caught in a fierce streamlining catch-up game with rivals Ford Motor Co. (F) and Chrysler Corp. (C), insists that unless it streamlines now, it will pay the price for its lumbering operations later. The company's share of the U.S. market has already dipped from nearly 50 percent two decades ago, to 31 percent, and the shrinkage has left it with too much excess production capacity.
The 3,400 strikers at GM's Flint Metal Center contend GM reneged on promises to invest $300 million in an upgrade of the facility. But Hackworth said Wednesday GM would not invest more than $120 million in the plant since the union had failed to address "non-competitive work practices that have been the subject of discussions since 1995."
Hackworth said the Flint Metal Center loses $50 million a year, most of that from work rules involving 1,500 engine workers.
He blamed the strike on the union's refusal to change work rules that allow employees to stop work after up to 6-1/2 hours while getting paid for eight, costing GM $33 million in overtime last year.
"We're not expecting these employees at Flint Metal Center to do any more than the employees at other facilities with similar equipment and processes," he said.
Analysts say GM has enough cars in dealer stocks or on the way to last 54 days, and enough light trucks - its most profitable business - to last 62 days. But supplies of some popular models have dwindled to the 50-day range or less.
"The ripple effect is hurting employees, shareholders and customers across the country and is very unfortunate," Hackworth said.
Shares of GM (GM) ended up 7/8 at 69-3/4 Wednesday, while Ford (F) stock climbed 2-3/16 to close at 54-3/16 and Chrysler (C) rose 1-1/4 to 55-1/16.
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