Long strike could cost GM billions

Long strike could cost GM billions  
Filed under:
News, General Motors
on 09/25/2007

If the United Auto Workers strike against General Motors Corp. lasts longer than a week or two, it could cost GM billions of dollars and stop the momentum the company was building with some of its new models, according to several industry analysts. A strike of two weeks or less would not hurt GM's cash position and would actually improve its inventory situation, Lehman Brothers analyst Brian Johnson said Monday in a note to investors. But a longer strike would be harmful, causing GM to burn up $8.1 billion in the first month and $7.2 billion in the second month, assuming the company can't produce vehicles in Mexico or Canada, Johnson wrote. Initially, the strike wouldn't have much impact on consumers because GM has so much inventory, the analysts say. The company had just under 950,000 vehicles in stock at the end of August, about 35,000 less than at the same time last year. But Tom Libby, senior director of industry analysis for J.D. Power and Associates, said even a short strike could hurt GM because its new crossover vehicles — the Buick Enclave, GMC Acadia and Saturn Outlook — are selling well and in short supply.

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