American Axle Strike Idles Six GM Plants, More to Follow
Reuters reports that the strike at American Axle is forcing General Motors to idle production at two more plants: Moraine, Ohio (Chevrolet Trailblazer and GMC Envoy) and the AMC General plant in Mishawaka, Indiana (Hummer H2). This brings the total number of off-line production facilities to six, including the four factories that produce the GMC Sierra and Chevrolet Silverado pickup trucks. Job-wise, "13,700 GM workers, or almost 20 percent of its blue-collar work force, could be laid off this week." Next in the firing line: Yukatahoeburbelade production in Arlington, Texas and Janesville, Wisconsin. GM is down-playing the strike's effects on its bottom line. Marketing maven Mark LaNeve painted the problem as a convenient way to keep inventories low– in the face of February's 20 percent decline in truck sales. But GM [still] depends on the big rigs for the lion's share of its profits. If the strike stretches on, if truck inventories sink below severely diminished demand, the drain on GM's cash flow will be nothing short of catastrophic.
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The inventory levels do not have to get real low to hurt. Once they run low on the popular color/option/drivetrain combos sales will spiral down (well, spiral down even faster than Feb.). This could start hurting at the dealer lots any day, if the strike continues look for nasty March sales news at the General. And your right RF, these are vehicles they might even sell at a profit, double ouch!
The domino effect on smaller suppliers, per Automotive News: Lear Corp., the seating supplier to GM's light trucks, has laid off 700 employees and idled four plants, spokesman Mel Stephens said. " Where GM production is down, we are down," said Stephens. He said another plant is operating at reduced speed and more closings are expected. Other big GM suppliers are expected to follow soon.
Except the showdown isn't between GM and anyone. This is a tier 1 supplier that is at odds with THEIR workforce. GM is the first stage in the trickle-up-then-back-down train. I would hope GM has other suppliers (Dana, etc.) that could start producing axles if necessary. Sure there'd be a major delay, but it could be done. It's not like those other axle mfg's are swamped with work from Ford/Dodge/Toyota/Nissan. I would really hope they don't leave all their eggs in one basket at every level. One has to hope that a Fortune 10 company is smarter than that.