Monday

GM Workers Strike

GM workers went on strike Sept. 24. Behind it? Lots of things both sides say, but the root of it all (of course) is money and debt.

The UAW union is in a tough spot. They know there's $114 billion of unfunded health care and pension liability to be dealt with. Talks are that switching that to a union-managed trust fund would protect it better than leaving it as an unfunded risk on GM's books, if they can get GM to throw a one-time chunk of cash into the pot. Still, a strike drains cash from both sides and that means it's unlikely a strike would last for long.

Reports are that about 63 % of UAW workers can retire over the next 5 years. When you realize that about 44 per cent of the entire existing union membership has already retired, it doesn't take a rocket scientist to realize that the union is facing big time trouble with a dwindling membership at its core.

But GM is in a tough spot too, with car dealers sitting on unsold inventories of cars and trucks in a sluggish sales economy. So GM can certainly let the plants sit idle while dealers sell off the old iron. What the union can promise its younger members is a fight to keep remaining jobs inside the US and maybe even increase them.

Either way, Wall Street appears to be betting that this strike won't last long. There's too much competition out there in the marketplace for GM to let a strike go on too long. And there's too much risk and money at stake for the union to let it go on too long, either.

Of course, you just know that Ford and Chrysler are watching it all very, very closely.

Burdge Law Office
Helping Consumers Get Rid of Lemon Cars and Lemon Trucks Since 1978