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GM strike won't last long, industry analysts predict

Talks continue, with minimal impact expected.

DETROIT - Unlike the 1970 United Auto Workers' strike against General Motors Corp., which went on for 69 days and helped push the nation into a recession, industry watchers predicted Tuesday that the current strike will be a short one.

Both sides have something the other desires - the workers want job security, GM wants to make retiree health care a union burden - and that's the stuff that agreements are made of.

"The UAW and GM understand that a strike is a lose-lose proposition," Deutsche Bank analyst Rod Lache said Tuesday in a note to investors.

The two sides were back at the bargaining table Tuesday as workers walked the picket lines for a second day. Talks restarted Tuesday morning after bargainers ended a marathon, 36-hour session Monday evening, GM spokesman Dan Flores said. Analysts were encouraged that the talks have continued throughout the strike.

GM's 73,000 UAW-represented employees walked off their jobs Monday after the union said GM failed to make promises for future products and investment in U.S. plants. GM said it was disappointed and would work with the UAW to address its competitive challenges. Wall Street was taking a wait-and-see approach. GM shares slipped 32 cents, or less than 1 percent, to close at $34.42 Tuesday.

In 1970, the UAW's strike against GM rippled through the economy. Production declined, unemployment rose and retail auto sales dried up, according to an analysis by Merrill Lynch. A 54-day strike against two GM plants in 1998 wreaked similar havoc and cost GM $2.2-billion.

This strike already is having an impact. Auto supplier Delphi Corp., GM's largest supplier, said Tuesday it was temporarily laying off workers. Delphi spokesman Lindsey Williams wouldn't give numbers because the situation was in flux. Delphi has about 25 U.S. plants that supply parts for GM.

Still, industry watchers predict the strike's impact will be minimal. Goldman Sachs auto analyst Robert Barry said if the UAW had planned a long strike, it would have struck one or two key plants instead of about 80 of GM's U.S. facilities. The UAW is paying striking workers $200 a week from its $800-million strike fund.

The union's quest to preserve jobs through guarantees that new cars and trucks will be built at U.S. factories clashes with GM's need to close plants to match demand for its products, said Greg Gardner, an analyst for Harbour Consulting, a Troy, Mich., company that tracks manufacturing productivity.

GM needs the flexibility to be able to close plants when demand for a certain product drops, he said. Currently the company must pay workers most of their wages when they are laid off.

"They've got to negotiate as much flexibility as they possibly can get," Gardner said. "In some cases, it'll mean closing plants and offering some people the option of transferring to another plant."

[Last modified September 25, 2007, 23:20:19]