Possible Strike at GM?

Just when you thought things couldn't get any worse, the UAW is flexing their muscles with regard to a possible strike should CEO Rick try to get tough on healthcare concessions before the expiration of their current contract in 2007. But before you start feeling bad for them, you might want to consider the chess game going on between the Union and current management.

While Wagoner certainly didn't actually say anything of significance in his recent speech to shareholders, he did communicate quite a bit. In summary, nothing has changed, in either the overall plan or the current course GM is poised to take.

At first glance, the last thing GM needs right now is a work stoppage, which would be terrible in terms of PR. If you think about, though, they have been cutting back production consecutively for several quarters, so a brief "labor-related" break might actually be blessing in disguise. Now, I don't think this is some ingenious tactic by the management to gain a short cut in production, as crafty as that might be (a little more bad press surrounding on their already poor image wouldn't really make a difference, would it?). But this is clearly a preemptive strike from the Union to gain some additional public support for what is clearly going to be a showdown.

In lieu of delivering a convincing plan that something is being done, or at least that GM is aware of severity of its current situation, Wagoner instead used the opportunity to further "line up his ducks" on the healthcare issue. He did not, however, succeed in gaining popular support. Nobody fell for the 25,000 cut in employees by 2008/plant closure/cost containment message. It has been widely accepted that these numbers merely represent the natural attrition rate at GM and that some plant closures are necessary in the normal course of operations when you consider decreasing employment, lower production, outdated facilities, etc.

This is not to suggest that the UAW is not to some degree responsible for the current situation. All industry experts agree that it is going to take considerable concessions and cutbacks in all aspects and areas of the company to right this ship, including substantial reductions in everything mentioned above. Consolidation of brands and cracking open the piggybank is also going to be required, but that’s another story.

In case you missed it, the wrangling between management and the UAW is well underway. Both the Wagoner "compromise" and UAW "threat" are simply sacrificial pawns in the overall match, and while nothing has really changed, it will be interesting to see what happens when they actually start moving around some real pieces.