Local strikes hit GM's hot-selling vehicles

DETROIT -- Taking out the plant that builds General Motors Corp.'s hot-selling crossover vehicles was one thing, but now the United Auto Workers are set to cause the automaker even more pain by striking at the factory that makes most of its car transmissions.

And although local union officials deny it, industry analysts say the walkouts are an effort to draw GM into the union's bitter, two-month contract dispute with parts maker American Axle and Manufacturing Holdings Inc.

On Thursday, members of UAW Local 602 walked out of the GM plant in Delta Township that makes the Buick Enclave, Saturn Outlook and GMC Acadia large crossover vehicles.

Local 909 has set a 10 a.m. Friday strike deadline at a transmission plant in Warren, one that makes the four- and six-speed gears for nearly all of GM's cars including its fastest-selling model, the new Chevrolet Malibu.

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.

"It does put stress on the company and their cash flows," said Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co. "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."

Kevin Riddell, powertrain forecasting manager for J.D. Power and Associates, said the Warren factory supplies transmissions to nearly all GM cars. Another plant in Windsor, Ontario, could make up some of the supply, but GM would feel the effects of a strike rather quickly.

"For the Malibu, they've really been going gangbusters trying to make parts for it," Riddell said. "Really pretty much any hiccup is going to have some effect at least."

Local negotiations were under way late Thursday in Warren, and a top Local 909 official said workers will report Friday morning but are prepared to strike.

Jim Marcum, the local's financial secretary, said the talks are not related to the American Axle strike.

"We still don't have a local contract even though ours expired last September," he said. "What they're negotiating now has nothing to do with American Axle."

Local plants negotiate their own operating agreements separate from the national contract, which was settled last year. The local contract deals with issues such as overtime and work rules.

Thursday's strike at the crossover factory near Lansing was the first one over local issues since two parts plants went out in Flint a decade ago, GM spokesman Dan Flores said.

Hastings said it's more than coincidence that the union would go after GM's popular vehicles with local strikes, especially since it was able to settle the complex national contract with only a short, token work stoppage.

GM accounts for 80 percent of American Axle's business and the automaker would have leverage over the supplier.

He said it's amazing that GM and the union got "through all of the trouble and pain that they've gone through and then had a local strike flare up into something like this. It's sad and we hope it's short lived."

Shortly after 10 a.m. Thursday, hundreds of workers streamed out of the Delta Township plant and began walking picket lines.

Talks recessed for the day on Thursday afternoon but were to resume Friday morning.

Tim Berry, 50, of Holt, one of the 2-year-old plant's 3,400 hourly workers, said the strike was justified.

"Since we've been out here, we haven't really had a local agreement," the 32-year GM quality control worker said.

The UAW has been on strike against American Axle for nearly two months, and more than 30 GM plants have been affected.

But so far, the strike has mainly hit production of GM's trucks and sport utility vehicles, which were selling slowly anyway.

The crossover and transmission plant strikes could have a more serious impact. GM has only a 40-day inventory of the Buick Enclave and only a 37-day supply of Malibus, according to Ward's AutoInfoBank. A 60-day supply is considered ideal in the industry.

The crossovers have been important for GM as buyers trade in gas-guzzling sport utility vehicles. Crossovers are built on car underpinnings and are more efficient than SUVs, yet they have nearly the same people-carrying abilities.

GM shares closed down 11 cents, or 0.5 percent, at $19.79 on Thursday.