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Strike mires truck rollout
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July 13, 1998: 7:49 p.m. ET
GM could lose market share as walkout forces delay in pickup launch
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NEW YORK (CNNfn) - General Motors Corp. recalled 2,800 auto workers Monday to begin production of a new full-sized pickup truck, but a pair of costly strikes could throw a monkey wrench into GM's launch plans.
Production of the full-sized Chevrolet and GMC trucks were supposed to ramp up this week, following GM's (GM) company-wide two-week vacation.
But the walkout, now in its second month, is likely to keep production levels well below plan.
"The pickup trucks are definitely going to be delayed," said Maryann Keller, auto analyst for ING Baring Furman Selz. "The broader issue is not just the question of the pickup trucks and how much (GM is) hurt by that. It's really the question of the permanent loss of market share that's going to occur from this -- whether it's in pickup trucks or minivans or small cars."
GM's rollout plan in disarray
Analysts had expected GM to sell 1.2 million new pickups and make a profit of $4,000 or more per vehicle.
And even though the company reopened a Canadian plant for pickups today and recalled 2,800 workers at another factory near Detroit to begin building pilot vehicles, experst say the rollout plans are in disarray as the Flint, Michigan strike looks like a national battle of wills.
"To the extent this lasts another week or two, GM is basically going to miss the '99 launch at a time when Ford, Chrysler, Toyota and Honda will all have significant new products in the market. In this business, once you lose a customer, it's hard to regain them," said Steve Girky, auto analyst for Morgan Stanley Dean Witter.
The full-sized pickup truck is GM's top-selling vehicle, and one of the most profitable in its lineup.
As such, the launch of the new trucks is crucial to the company's future profitability.
GM reopened its Oshawa, Ontario assembly plant Monday where preliminary production of the 1999 Chevrolet Silverado and GMC Sierra pickups began last month. However, the plant has a limited amount of parts stockpiled, and once that supply runs out, production will stop if the strike is not settled.
On Sunday, a flurry of last-minute talks aimed at settling the strike before GM's vacation period ended, failed to produce an agreement, prompting senior officials from both sides to walk away from the table and allow local leaders to continue negotiations.
A total of 9,200 UAW members in Flint walked off the job in two separate strikes at the Flint Metal Center, a metal fabricating plant, and the Delphi East parts plant. The Flint Metal strike began on June 5, with Delphi East following on June 11.
Strike has cost GM $1.2 billion
The strikes have cost GM $1.2 billion in the second quarter, when it lost production of 227,000 cars and trucks. GM is expected to detail the strike costs on Tuesday when it releases its quarterly financial results.
At issue in the strike is whether GM should be forced to invest money in parts factories that are not competitive with outside suppliers.
UAW Local 659 at the Flint Metal Center has demanded GM keep an earlier commitment to invest $300 million in new metal stamping presses that would guarantee that plant's future. GM says outdated work rules make the plant unprofitable and will prevent the new equipment from reaching its full potential.
At Delphi East, which makes spark plugs, filters and instrument clusters, there are 5,800 members of UAW Local 651.
UAW officials say GM wants to send work out of the plant that would cost 2,500 union jobs.
GM has insisted any settlement at the two Flint plants also include deals that would prevent threatened strikes at three other facilities -- a stamping plant in Indianapolis, a brake complex in Dayton, Ohio, and an engine and powertrain components operation in Flint.
The company and its union workers are hurting, but the situation is even bleaker for dealers who are rapidly running out of cars and have no idea when the 1999 models will be on the showroom floor. 
-- by staff and wire reports
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