Multiple Strikes Hurt GM, May Affect Car Buyers

Reuters reports, "A local unit of the United Auto Workers went on strike on Thursday at a General Motors Corp plant that builds fast-selling crossover vehicles."  Union leaders and GM management "failed to agree on work rules and other issues."  The facility builds the Buick Enclave, Saturn Outlook and GMC Acadia crossover SUVs.  The strike has the potential to hurt the General.  "Sales of GM's midsize SUVs and crossover vehicles rose 47 percent in the first quarter from a year earlier, driven by the Enclave, Acadia and Outlook," three rare success stories in a declining auto sales market. 

USA Today reports, "Enclave is the best-selling Buick. Acadia is the second-best-selling GMC, after the Sierra full-size pickup."

GM has also been slowed by a strike at parts maker American Axle over the last month.  That strike, however, has had little impact on consumers.  American Axle primarily makes parts for trucks and large SUVs -- which few consumers have been buying, anyway. 

Success in the auto industry is measured by "days of inventory."  Automakers aim to have 60 days worth of any particular model of car on hand.  If they have fewer than that, manufacturers generally believe they are not making the cars quickly enough to meet demand.  More than 60 means they've manufactured too many, and may need to discount the cars to sell them.

The AP reports, "The crossover plant strike could have a more serious impact. GM has only a 40-day inventory of the Buick Enclave, compared with an inventory of more than 150 days on some large trucks and SUVs when the American Axle strike began." 

In a separate article, the AP speculates, "Together, the strikes over local contract issues could severely cut into GM's profits if it can't supply dealers with the only models that are selling in an uncertain economy." Pete Hastings, an auto industry analyst with Morgan Keegan & Co, told the AP "It does put stress on the company and their cash flows.  They have plenty of liquidity and can make it for quite a while, but we don't like to see these strikes get out of hand."

GM's troubles may not have peaked yet. 

USA Today adds that workers may be "preparing to strike today at a plant in Warren that makes transmissions for most GM models, including the award-winning Chevrolet Malibu."

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