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Members of the UAW, which represents 73,000 workers at 82 U.S. GM assembly plants, component plants and parts warehouses, walked out moments after the 11 a.m. ET strike deadline. The union set the deadline after it couldn't come to an agreement with GM on a new contract because of differences on job security, benefits and other issues.USA Today
It is the first nationwide strike against GM since 1970 and the first against any Detroit automaker since a 1976 nationwide action against Ford Motor.
The last nationwide action against GM was a 67-day strike in 1970.
GM had $23.6 billion in cash at the end of the second quarter, which will help it weather a strike that could cost it $325 million to $350 million a week according to Burnham Securities analyst David Healy.
Walters said that pressure to reach an agreement will come from UAW members themselves. "They're going from what I'd guess are an average $1,300 a week gross wages to $200, and they don't get unemployment."
GM is seeking to get the UAW to agree to managing retiree health care, which is an estimated $52.5 billion long-term liability, says Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Mich. GM wants the union to accept a sum of cash and assets worth 50% to 60% of the liability.Business Week
That has been the sticking point. If GM gets its way, it would contribute about $30 billion. The UAW, which recently set up a health-care trust, called a voluntary employee benefits association (VEBA), with parts maker Dana Corp. (DCN), recently got 71%, Citigroup (C) capital markets analyst Itay Michaeli wrote in a research report. At that rate, GM would need to pony up about $35 billion.
If I was UAW, why would I want a $52.5 billion liability and $35 billion in assets? The math doesn't make sense to me. I'm sure though GM would be very happy if it could get $52.5 billion of liabilities off its books.
The Detroit Free Press says that the UAW has a strike fund of $800 million, about enough for a year.247wallst
GM understandably wants to be able to shut plants as its sees fit, and, perhaps, move some manufacturing off-shore to save money. So, this is the UAW's last stand. If it gives here, it has given for good.
It's becoming more and more clear that the UAW is digging in for the long haul on this one, and with little to no response from General Motors in terms of how long it intends to stand firm, the most significant staring contest in the history of the automotive industry has just begun.Autoblog
Well, I've been looking for a good time to short GM stock. And the stock certainly won't be going up in the near future.
- #3 in Fortune 500
- 280,000 fulltime employees
- 80 plants and parts centers in 30 states
The View from Inside Detroit of the UAW/GM Strike
GM workers strike after talks fail
GM Strike: Not To Worry
UAW strike deadline arrives
Posted: 2007-09-25 09:15:48
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