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Wednesday, September 26, 2007

That was Quick

The UAW strike against GM lasted a whole 3 days, that was quick. It might lead one (me) to believe that it was called not because GM and the UAW were so far apart on issues, but instead because the union wanted to show that it still could strike.

The other reason I don't think the strike had much to do with the current negotiations is that GM is sitting on 67 days worth of inventory, 90 on it's trucks. Unless the UAW thought that they were going to be out for at least half of that, it really wasn't a strike that was going to bother the automaker. All it did was reduce their costs for a week, and help sell down inventory.

Details of the tenative agreeement aren't being released, though both sides have said that VEBA, the trust that the UAW will run to manage retiree health care is part of the deal. That's good for GM (up about 7.3% in European trading) because it kills about 3 billion a year in expenses after a one time charge to fund VEBA.

Hopefully GM's management will use the extra "leg room" they are getting finacially on this to do some smart things, like lower prices on a few of the models that are decent sellers to get more of them on the road.

They also need to put a chunk of it into tooling up for some "real" hybrid production to compete with Toyota and Honda, who basically own that market. Their current crop uses a big battery to start the engine while idling, but not to actually run the car. A full hybrid Saturn Vue and small car on the Chevy Cobalt platform would go a long way towards getting them competitive in that market segment.

It will be interesting to see what concessions were made towards a lower (Toyota USA like) payscale for new workers and a 401(k) style retirement plan for them. With nearly 25% of GM's workforce eligible for retirement in the next five years, those savings would make them cost competitive with just about anyone before this contract runs out.

Technorati Tags: GM, UAW, Strike, Contracts

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