UAW Strike a 'Defining Moment?'

By Rick Moran

The United Auto Workers, seeking to hold on to lucrative health benefits and job protections, has gone on strike against General Motors for the first time since 1970.

More than 73,000 workers struck 80 GM facilities in 30 states and some analysts see a long strike:

The length of the walkout may hinge on the answers to two crucial questions: How long can the U.A.W. afford to stay out? And how long can G.M. endure a strike? While an indefinite strike would pose risk to both sides, each has made a calculated decision that it has more to gain by standing tough. G.M. is better positioned to handle a strike now than in earlier contract talks, though not for reasons that have to do with strength. With its operations shrinking in the United States, the majority of its sales and profits are now coming from abroad.

GM is seeking to move to a lower cost structure and more flexible work force to better compete against Japanese automakers. The danger, as in every auto strike, is that the network of suppliers and manufactures that feed the GM assembly lines will also be hit thus causing a ripple effect through the economy:

Jonathan Steinmetz, an analyst with Morgan Stanley, said the company could endure a strike lasting several weeks, but not more. After that, G.M. would begin to burn cash, and investors, who have encouraged G.M. to take a firm stand with the U.A.W., might eventually grow impatient in the face of a months-long strike. Another analyst, Mark Oline of Fitch Ratings, cautioned that the damage caused by the walkout would have a ripple effect on suppliers that sell parts to G.M. “The U.A.W. strike has the potential for far-reaching, crippling repercussions throughout the industry,” Mr. Oline said in a research report yesterday.

The last time UAW went on strike against GM, they had 400,000 workers walking off the job. Today's GM workforce of just over 73,000 shows why labor unions don't have the clout they once had in Congress.