Analysts Predict Massive Losses for General Motors If Strike Prolonged

Topics:  General Motors, UAW

Alex Villarreal
Voice of America
September 25, 2007

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As members of the United Auto Workers at General Motors continue on strike for second day Tuesday, industry analysts say the company could lose billions of dollars. VOA's Alex Villarreal reports from Washington.

Analysts say the strike by more than 73,000 General Motors workers will not hurt the U.S. automaker if it ends within the next two weeks.

But in a note to investors Monday, an analyst at the global investment bank, Lehman Brothers, said if the strike lasts longer and production is lost in both Canada and Mexico, it could cost the largest U.S. automaker more than $8 billion by the end of the first month.

The strike - which began Monday - has already shut down one assembly plant in Canada and could force another plant closure by Tuesday evening.

On Monday, members of the United Auto Workers, or UAW, walked off their jobs at about 80 GM facilities across the United States, after contract talks broke down over job security and health care.

Speaking at a news conference, UAW President Ron Gettelfinger said the strike was called after GM failed to meet the bargaining deadline set by the union.

"The company walked right up the deadline like they didn't really care," he said. "And as a result of that, we called a strike."

Gettelfinger says the primary unresolved issue is job security. The UAW wants GM to guarantee it will keep production jobs in the United States.

Negotiations also include a GM proposal to cut the company's healthcare costs by creating a UAW-run trust fund for retiree health benefits. GM has been seeking labor concessions to close a more than $25 per hour labor cost gap with its Japanese competitors, such as Toyota and Honda.

In a statement, GM said it is disappointed that the union decided to call a strike. The company said it is fully committed to working with the United Auto Workers and reaching an agreement as soon as possible on what it called its "competitive challenges."

But Gettelfinger says GM needs to change its approach.

"We were very disappointed in this round of negotiations to discover as we moved forward that it was a one-way set of negotiations," he said. "It was going to be General Motors' way at the expense of the workers."

Negotiations resumed shortly after the strike began and continued Tuesday for a 22nd straight day. The union's contract expired on Sept. 14.

This is the UAW's first nationwide strike against GM in 37 years.

In 1998, a UAW walkout at two GM parts plants in Flint, Michigan, shut down production and caused sales to plummet.

GM is undergoing a massive restructuring in the face of a steady loss of market share to its Asian competitors. The company has been forced to close dozens of plants across the country and says it is still not profiting from its North American operations.