Analysts: GM didn't win enough concessions
By Jeffry Bartash, CBS MarketWatch
Last Update: 10:53 AM ET Jul 27, 1998
DETROIT (CBS.MW) -- Many
car-industry analysts are waiting for full
details on the General Motors strike accord
before rending a final verdict, but some already
are pooh-poohing the deal.
William T. Wilson, an economist at
Comerica Bank in Detroit who follows the
industry closely, said preliminary details of
the agreement indicate that GM (GM) failed to
"extract enough concessions."
"GM was in a no-win situation and had to
compromise by settling the strike," Wilson
said. The company lost more than $2
billion during the 53-day standoff and was
facing a potential market-share loss.
GM is the least efficient among the major
U.S. automakers and earns significantly
less per vehicle than its top rivals, Ford
Motor Co. (F) and Chrysler (C). And
those companies are not resting on their
laurels, Wilson said.
"As GM stands still, Ford announced last week
that it will downsize 10 percent of its
white-collar work force," he noted. "GM is not
moving fast enough."
To improve competitiveness, according to
observers, GM eventually needs to win
concessions from workers to boost productivity,
eliminate slow-selling models, close or sell
some plants, and scale back its employee rolls.
In a report last week, Morgan Stanley Dean
Witter analyst Stephen Girsky wrote: "We have
long argued that GM had too many plants, too
many employees, too much management, too many
models and too many dealers."
Bear Stearns analyst Nick Lobaccaro estimated
that GM needs to slash as many as 50,000 of its
approximately 225,000 workers to remain
competitive in the long run.
If GM doesn't move faster, Wall Street
eventually will punish the company, Wilson said.
"In the next few years," he said, "GM won't call
the shots, and the United Auto Workers won't
call the shots -- the investors will."
Jeffry Bartash is a reporter for CBS
MarketWatch. |
