Contract worries weigh GM stock down 5% dip attributed to expected clash

October 01, 1993|By Bloomberg Business News

DETROIT -- General Motors Corp. stock closed down nearly 5 percent yesterday in selling analysts attributed to concerns about imminent labor talks with the United Auto Workers union.

The share price also was hurt by portfolio managers cutting their positions on the last day of the quarter, analysts said.

GM, the day's most actively traded U.S. issue, closed down $2.125 a share, at $41.75, on New York Stock Exchange volume of 7.8 million, almost four times the stock's three-month daily average.

"I think this reflects the expectations about the upcoming talks with the United Auto Workers union and the underlying resolve" by GM's board not to bow to union demands, said David Garrity, analyst at McDonald & Co. "It seems we're going to have a 'Clash of the Titans.' "

GM's board is expected to review its bargaining strategy Monday.

The UAW is negotiating a three-year contract with Chrysler Corp., as the two sides near a midnight deadline. The union is hoping to get Chrysler to agree to the key provisions of its contract reached with Ford Motor Co. on Sept. 16 before tackling GM's bargaining team.

GM's Canadian operations reached a three-year labor agreement Wednesday night with the Canadian Auto Workers (CAW), about one hour before the union-imposed midnight deadline.

The pact, which covers about 28,000 GM of Canada workers, was essentially the same agreement that the CAW reached with Chrysler Canada in September. Both settlements provide wage increases of 2 percent, 1.5 percent and 1 percent in each subsequent year of the agreement, as well as cost-of-living allowances, improved pensions and more paid time off.

About 1,500 workers would be eligible in the next year to take a $35,000 (Canadian) lump-sum payment as an additional incentive to retire early.

While GM said it was pleased with the CAW settlement, the automaker sought yesterday to spell out the differences between negotiations in Canada and the United States.

"The agreements are substantially different in all major areas, including wage treatment, job and income security provisions, health care and pensions," said Gerald A. Knechtel, vice president of labor relations for GM's North American operations.

"Furthermore, GM's unfunded pension liability is considerably less in Canada than that attributable in the United States, and of course, Canada has a national health care system that generates a totally different equation for health care costs."

Earlier this week, GM President John F. Smith Jr. said the agreement between the UAW and Ford "would be very difficult for us."

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