Word: gm
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Dates: during 1980-1989
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...partial shutdown at GM came at a very healthy time for the U.S auto industry. For the first eight months of the year, car sales are up 24.1 % over the same period in 1983, and trucks are up 36.5%. Before the strike hit, the industry was headed for its second-best year in history, with sales of 14.9 million cars and trucks...
...good times, however, mean additional bargaining chips for the U.A.W. Robust sales and a new industry drive to keep inventories low have resulted in a relatively small supply of unsold cars. Even though GM's assembly plants are producing at close to capacity, the company's supply of cars is only 49 days, vs. a normal 60 days. Dealers are even worse off; many have only enough cars on hand for 31 days of normal sales...
Neither Ford nor Chrysler is in a position to earn windfall profits from GM's distress. Both companies also have low stocks of their popular models. Since both firms' assembly lines are operating at near capacity, they will not be able to increase production significantly to make up for the GM shutdown...
Japanese automakers are also unable to benefit from GM's woes, since their U.S. sales this year are limited to some 1.85 million vehicles under restrictions first negotiated in 1981. Said a Japanese automaker in Tokyo last week: "There is no room for us to take advantage of such a situation." Honda, the only Japanese company currently assembling cars in the U.S., expects to turn out 150,000 vehicles this year at a plant in Marysville, Ohio...
...diversify into new industries, Michigan, Ohio, Indiana and Missouri are still heavily dependent on the auto industry. Michigan factory towns like Pontiac and Flint, now enduring unemployment rates of 18.8% and 12.4%, respectively, could suffer an economic earthquake. Steel, rubber and glass producers could lose their biggest customer. GM, for example, buys about 10% of all the steel produced in the U.S. Sales in stores and restaurants are likely to slip when striking workers stay home, and tax revenues will slide...