As General Motors considers contingency plans in light of a potential strike at its main parts supplier, analysts reportedly fear a walkout could cost the troubled car maker billions of dollars.
According to Reuters, bankrupt Delphi plans to ask the court to void labour contracts with its unions if a deal is not reached by 16 December, and analysts worry that a strike could shut down some GM and Delphi plants.
United Auto Workers leader Ron Gettelfinger on Wednesday reportedly said the union was on a “collision course” with Delphi, prompting analysts to believe a work stoppage is more likely than many had previously thought.
“We think a Delphi strike is unlikely, but that the probability of work stoppages at certain facilities is high and could still be very damaging to GM,” Goldman Sachs analyst Robert Barry said in a research note cited by Reuters.
Barry also reportedly said that GM may offer incentives to Delphi employees to avoid a strike, but that would be a “cash drain”.
“We are looking at contingency plans, but can’t really elaborate on what they are specifically,” GM spokesman Stefan Weinmann told the news agency. “And we are not saying that we already have one in place.”
Barry reportedly said he would not be surprised to see a deal with the UAW and Delphi raise the needle on the pension liabilities GM would have to pay.
Reuters noted that UBS analyst Robert Hinchcliffe has said a strike at one or two strategic plants would force GM to burn through US$19 billion in cash and liquid assets in about 10 weeks. Deutsche Bank analyst Rod Lache said GM may burn through $13 billion in cash if the potential strike were to last a quarter.
JP Morgan analyst Himanshu Patel on Thursday told Reuters a voluntary bankruptcy at GM is unlikely and would lead to an abrupt decline in sales.
“Consumers are unlikely to continue to buy $30,000 cars from bankrupt (automakers) given the priority placed on quality, warranty, resale value and after-market support,” he reportedly said.