GM workers may strike Wis. plant

November 08, 1994|By Bloomberg Business News

DETROIT -- General Motors Corp., which lost about $150 million and production of 40,000 vehicles to two strikes this summer, faces a walkout at the plant that makes its popular sport-utility models.

Workers at GM's Janesville, Wis., plant voted this weekend to authorize union officers to call a strike if the automaker won't agree to hire more workers, said United Auto Workers union Local 95. The local represents 4,700 workers at the factory.

If the two sides are unable to reach agreement after bargaining, UAW officials in Detroit could authorize the local to strike after five working days.

"GM just doesn't have enough people to work in its plants," said Todd Grieco, who follows automotive production for the WEFA Group in New York. "Many workers are putting in 18-hour days, and they are starting to object to it. GM is now finding that with sales getting stronger, too many people left GM under the generous provisions of the last national labor agreement."

This summer, GM stopped building four-door pickup trucks at Janesville to increase production of its popular full-size sport utility vehicles, the Chevrolet and GMC Suburban. The union said it needs more workers before production of those models can begin.

"That's one of the things we are still trying to work out," said GM spokeswoman Sherrie Childers.

A walkout at the Janesville plant could hurt GM because it can't churn out the profitable sport-utility vehicles fast enough to meet demand. In October, sales of Chevrolet and GMC Suburbans rose 17 percent from a year earlier. GM had a model inventory of about 45 days when a supply of 60 to 65 days is considered normal.

A lack of workers has been a sore point among GM union locals. As part of a huge restructuring, GM is trying to increase output and efficiency using a smaller hourly work force, all while U.S. auto sales remain robust.

Among those feeling the pinch are workers at GM's van plant in Southeast Baltimore, where 10-hour shifts, overtime Saturdays and a number of temporary workers are being used to meet demand.

GM had 244,000 U.S. hourly workers on its payroll Oct. 1, the latest figure available. At the end of 1993, GM had 262,000 U.S. hourly workers, down from 304,000 in late 1991.

"We can't get enough people," said Clifford J. Vaughan, GM vice president and group executive in charge of North American Truck Platforms in September.

This summer, GM was hit with strikes at its Buick City plant in Flint and a parts plant in Anderson, Ind. Those walkouts kept the company from making about 40,000 cars and trucks, and cost it $150 million in income, the company said.

Even with a $200 million tax gain, GM's North American operations lost $328 million in the third quarter, down from a $723 million profit in the second quarter.

Demand for U.S. cars and trucks remains robust. U.S. vehicle sales rose to an annual rate of 15.4 million last month, up from 14.8 million in September, automakers said last week.

The combination of high demand and production bottlenecks is TTC costing GM sales opportunities. The automaker said last week it's lopping a total of 50,000 vehicles from its planned fourth-quarter output in North America, or about 14,000 more than the company estimated in early October.

Even if GM meets its new target -- which some industry watchers doubt -- GM could see its fourth-quarter income cut by an estimated $130 million and revenue cut by $785 million, based on an average price of $15,700 a vehicle.

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