Word: delphi
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...Wagoner, the next 18 months will define his stewardship, if not GM's future. GM, Delphi and the U.A.W. are locked in a complex feud over how to restructure the partsmaker, whose fate is tied to the automaker's. GM has agreed to take back as many as 5,000 Delphi workers, and thousands more are being offered buyouts. But Delphi chief Robert (Steve) Miller has asked the bankruptcy court for permission to void labor contracts, which would allow him to slash wages if the unions won't concede--a move that could spark a strike. He also wants more...
...fact that Miller wants better terms for supply contracts with GM, while GM claims it pays too much already. The judge heard arguments over the labor contracts last week and is expected to rule this summer. GM CFO Fritz Henderson said, however, he expects to reach a settlement with Delphi and the U.A.W. within 60 days. GM, meanwhile, is stockpiling parts in case of a strike. "The consequences of our not addressing this effectively are big," says Wagoner. "Nobody wins with a long strike...
...first-quarter sales of full-size SUVs. Even if gas prices continue killing the segment, the thinking goes, GM could pick up market share. They like York's presence on GM's historically wimpy board. Analysts also figure GM will pay whatever it takes to avoid a Delphi strike. With roughly 6,000 blue-collar workers expected to be left at Delphi, GM "could easily afford to compensate those employees to avoid a labor disruption," notes Prudential Financial analyst Michael Bruynesteyn. And labor bosses know a strike would be mutually assured destruction. Says industry analyst Cole: "Everyone is scared...
Skeptics also question GM's books. The Securities and Exchange Commission is investigating the way GM accounts for retirement benefits and transactions between GM and Delphi. GM took a charge of $800 million last year to pay for factory closures, but that may not reflect the final cost of workers' opting for the jobs bank instead of retiring; analyst Bruynesteyn figures GM will have to book another charge for that in 2007. GM's various cost-cutting moves should boost the bottom line, resulting in net income of $1.6 billion next year, Bruynesteyn estimates. Yet the healthier GM's finances...
...Murphy, the Merrill Lynch automotive analyst, said in a note to investors that a strike remains a very real threat as long there is no agreement on issues beyond the buyout proposal. Delphi chief executive Robert "Steve" Miller is pressing for more concessions and has said he will petition the court next week to set aside the company's existing labor contracts if there is no agreement with the UAW and other unions. Last fall, Miller briefly proposed cutting the wages of Delphi workers by 63%; the union has warned that a strike is possible if the court imposes...