Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : GM - General Motors -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (72)	7/1/1998 7:26:00 PM
From: TheSlowLane	Respond to of 543

I have also been surprised but not disappointed by the strength shown by GM even as the strike wears on. If you believe what you read in the papers - the analysts would rather see GM coming out of this without making a lot of concessions, particularly in light of the reported low productivity in those plants. So a good settlement is more important than a quick settlement. Still, it would seem reasonable to anticipate that the impact of the strike on at least short-term results will be increasingly significant as it drags on. I have not researched GM extensively myself. A value-oriented money manager I know said that they had watched GM very closely for a year before taking a position in it several months ago. They felt that the company had made measurable progress towards setting the stage for more growth. One of the things that Zweig mentioned that I have heard elsewhere is that the value of the parts is much greater than where the whole is currently trading. There is no guarantee that these parts will get spun off - but there seems to be a growing body of opinion that anticipates that.

To: Ramsey Su who wrote (72)	7/2/1998 12:48:00 AM
From: j lawrence	Read Replies (1) \| Respond to of 543

Personally, I see the strike as negative short-term but extremely positive long-term for General Motors. My reasons are as follows: 1) Unlike Chrysler and Ford, GM never restructured its methods of doing business in the eighties. While the other auto makers reduced costs by outsourcing and through negotiations, GM fundamentally chose a path where it would avoid many of the hard decisions that needed to be made to improve productivity. This strike is a clear demonstration that GM is ready to make a change. 2) In the past five years, the outside directors in the Board of Directors, led by Smale, have forced management to reduce costs. This has really had an effect of "waking-up" a very complacent management. 3) In the 80's, Roger Smith made the the decision in Flint that has led to this strike. He sacrificed productivity for labor peace. Current management is reversing that. 4) Losing its #1 position in domestic sales to Ford even for one year will have the effect of shaking up the organization. 5) It will give GM an excuse to close the rest of its Flint operations over the next few years. Most of the analysts that I have heard in Windsor, ON have basically stated that if the Flint strike were resolved in June prior to the planned vacation period, they would downgrade the stock. A quick resolution would indicate that management was not serious in eliminating the noncompetitive work rules in Flint. A longer strike would be positive in that it would indicate that GM would be able to reach some of the manufacturing efficiencies that you see at F or C. I would not short the stock. I believe that there may be a 2-5 point downturn. However, that might quickly disappear if the strike is settled OR if GM looks to spin off some of its subsidiary, ala Ford's spin-off of the Associates.