Wed, Sep 26, 2007 page10

• UAW demands job security from GM

  IN A TIGHT SPOT The strike puts GM in a bind as its new products are catching on with consumers, but employees are also taking a big risk in an uncertain economy

  • AP
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  In the end, the first US-wide strike against General Motors Corp (GM) in 37 years came because the United Auto Workers (UAW) want something that GM will find difficult to promise -- job security.

  UAW officials said the 73,000 UAW members who work at about 80 US facilities for the largest automaker did not strike on Monday over what many thought would trip up the talks: a plan to shift the retiree health care burden from the company to the union. They said they also did not strike over wages.

  They said union members walked out because they want GM to promise that future cars and trucks such as the replacement for the Chevrolet Cobalt small car or the still-on-the-drawing board Chevrolet Volt plug-in electric car will be built at US plants, preserving union jobs.

  

  Employees on strike demonstrate in front of a General Motors assembly plant in Detroit, Michigan, on Monday.

  PHOTO: EPA

  The strike puts GM, which is restructuring so it can better compete with Asian automakers, in a bind as some of its new products begin to catch on with consumers. But it also means workers are taking a big risk -- giving up pay and slowing down GM in an uncertain economy.

  "Job security is one of our primary concerns," UAW president Ron Gettelfinger told reporters on Monday afternoon after talks broke off and the strike began.

  "We're talking about investment and we're talking about job creation" and preserving benefits, he said.

  If the strike lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, according to several industry analysts.

  A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation, Lehman Brothers analyst Brian Johnson said on Monday in a note to investors.

  But a longer strike would be harmful, causing GM to burn up US$8.1 billion in the first month and US$7.2 billion in the second month, assuming the company cannot produce vehicles in Mexico or Canada, Johnson wrote.

  Initially, the strike would not have much impact on consumers because GM has so much inventory, the analysts say.

  But Tom Libby, senior director of industry analysis for J.D. Power and Associates, said even a short strike could hurt GM because its new crossover vehicles -- the Buick Enclave, GMC Acadia and Saturn Outlook -- are selling well and in short supply.

  "The momentum they've established for those products would be interrupted if there's a supply interruption," Libby said.

  It was unclear what would happen to vehicles that were en route to dealers. The Teamsters transportation union said its 10,000 automotive transport members would not cross UAW picket lines.

  The strike will cost GM about 12,200 vehicles per day, according to the auto forecasting firm CSM Worldwide of Northville. If the walkout goes beyond 36 hours, would likely affect vehicle production in Canada because of a lack of US-built parts.

  The strike began at 11am on Monday. Talks resumed a short time later as picketers marched outside plant gates, but weary bargainers stopped to rest around 8pm. Negotiators were to return yesterday morning for their 22nd straight day of bargaining.

  Striking workers will receive US$200 a week plus medical benefits from the UAW's strike fund, which had more than US$800 million as of last November, according to the UAW's Web site.

  The UAW, Gettelfinger said, is willing to talk about taking money from the company to form a retiree health care trust, something he said the union proposed and the company rejected in 2005.

  GM wants the trust, called a Voluntary Employees Beneficiary Association (VEBA) so it can move much of its US$51 billion in unfunded retiree health care liabilities off the books, potentially raising the company's stock price. It is all part of GM's quest to cut a US$25-per-hour labor cost disparity with Japanese competitors.

  "This strike is not about the VEBA in any way," Gettelfinger said.

  "We were more than eager to discuss it," although he said no agreement had been reached.
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