GM seeking more cost cuts as talks stall It weighs dropping health insurance for 100,000 idled workers

Top GM negotiator goes home

Analyst predicts walkouts will last into mid-August

Automobiles

July 14, 1998|By BLOOMBERG NEWS

FLINT, Mich. -- General Motors Corp. stepped up its search for ways to conserve cash yesterday after failing to settle two crippling Flint, Mich., strikes over the weekend.

Top-level talks in Flint foundered largely over GM's demand that the union agree not to strike elsewhere once the Flint strikes end.

Gerald Knechtel, the GM vice president who is the company's top negotiator, returned to Detroit. He had been negotiating with Richard Shoemaker, the United Auto Workers vice president who is the union's lead negotiator.

With the scheduled two-week vacation shutdown at an end, GM resumed absorbing losses of $80 million a day from the dispute, now in its sixth week.

GM today is expected to report a strike-caused drop in second-quarter earnings and probably will use the occasion to restate its determination to stand fast, an analyst said.

"GM needs to find a resolution that will enable the company to improve its labor productivity to competitive levels and avoid the union going on strike every three months," said Stephen Girsky, a Morgan Stanley analyst, who predicted that the strikes will last until mid-August.

GM shares closed at $68.875, down $2.3125, reflecting investor disappointment in the company's failure to reach a settlement after raising expectations that it would. The shares have dropped 8.7 percent since the strikes began, while the Standard & Poor's 500 Index has risen 6.4 percent.

GM has said it might cut medical benefits for the roughly 100,000 U.S. workers who have been idled because of the strike. The company already has cut their dental benefits and all health-care benefits for the striking workers. The union, which maintains such a move is illegal, would pay for the benefits from its $800 million strike fund.

Knechtel said the company will continue to push its grievance that the strikes are illegal. It is also considering whether to seek a court order forcing workers back to work, he said.

"We are reviewing that, although no decision's been made," said Gerry Holmes, a GM spokesman.

GM also is probably taking a hard look at vehicles on its drawing boards, analysts said. Though none of its near-term new vehicle programs are likely to be cut, others could be delayed, said Mike Robinet, an auto industry consultant with CSM Corp. in Farmington Hills, Mich.

"GM's really going to make sure these programs meet their goals for profit," Robinet said.

If the strike drags on, GM might hasten plans to end production of money-losing parts or slow-selling cars, such as the Chevrolet Camaro and Pontiac Firebird, he said.

Plants restarted

GM might also try to reopen some plants using parts bought from outsiders, though Robinet said it's unlikely the company could find the parts it needs.

Yesterday, GM restarted the three assembly plants that hadn't been idled because of strike-related parts shortages: its Saturn factory in Tennessee, a small car plant in Ramos Arizpe, Mexico, and a truck plant in Oshawa, Ontario. GM has closed 26 of its 29 North American assembly plants, idling 166,000 workers.

Among the closed plants is GM's van assembly plant in Southeast Baltimore, which shut down June 12, resulting in 3,000 layoffs. The plant produces the Chevrolet Astro and GMC Safari midsize vans.

In addition, four local suppliers of GM's Baltimore plant have been closed.

It's not clear how long the three plants that resumed operations yesterday will be able to continue operating.

The Saturn and Oshawa plants have enough parts to last a few days. Canadian Auto Workers union President Basil "Buzz" Hargrove said last week that Oshawa probably will shut down by Thursday because of parts shortages.

Keeping the Oshawa plant running is critical to an on-time introduction of GM's most important 1999 models, its redesigned big pickup trucks.

GM also is facing strikes at three other plants.

Strike vote in Indiana

Sunday, UAW members at an Indianapolis plant voted to strike if negotiations with the company fail.

The union also is threatening to strike plants in Dayton, Ohio, and a third Flint plant, the Buick City assembly and parts complex.

GM is pushing for settlements at all those plants at the same time it resolves the two Flint strikes.

The union refuses to give up its right to strike at the other plants and says GM's position on the matter is prolonging the Flint dispute.

GM's push to boost productivity at a Flint metal-stamping plant caused the walkout there, while its desire to cut unprofitable operations at a nearby Delphi East factory led to the second strike.

Pub Date: 7/14/98

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