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To: Berney who wrote (566)	7/29/1998 10:47:00 AM
From: porcupine --''''>	Respond to of 1722

Auto analyst: "this has been a lose-lose all the way around..." Wednesday July 29, 3:03 am Eastern Time GM wins labor peace in UAW strike deal -analysts By David Lawder DETROIT, July 28 (Reuters) - The deals to end paralyzing strikes against General Motors Corp. (GM - news) do not solve the automaker's cost problems at a stroke but they do offer GM labor peace for the next 14 months, analysts said Tuesday. Terms of the accords -- at least those outlined by the United Auto Workers union on Tuesday -- were not worth the costs of the 54-day dispute, according to several industry experts. ''I think this has been a lose-lose all the way around,'' Canadian independent auto analyst Dennis Des Rosiers told Reuters Financial Television. ''There have been no winners. I don't care how they try to put a fresh face on this and try to come out looking good, this was a loss on both sides,'' he added. The strikes cost GM an estimated $2.5 billion in lost profits and at one point idled more than 200,000 workers, who lost thousands of dollars in wages. GM lost production of about 592,000 vehicles to the strike, about half of which it may be able to recover the next four months, according to CSM Forecasting. But GM's U.S. market share for the year is expected to sink below 30 percent, with much of the losses going to rivals Ford Motor Co. (F - news) and Chrysler Corp. (C - news). Comerica Inc. (CMA - news) chief economist David Littman estimated that the strikes, which left 25 of 29 GM North American assembly plants idled on Tuesday, shaved one fourth of a percentage point off U.S. economic growth during the second and third quarters. GM and supplier employees in Michigan alone lost some $200 million in income. At the Flint Metal Center, site of the most difficult dispute, GM agreed to complete a previously announced investment of $300 million in new stamping equipment, in exchange for a 15 percent productivity gain in the engine-cradle production area. ''Couldn't GM have signed what they signed today two months ago without all the lost wages and income?'' asked Burnham Securities analyst David Healy. ''It seems like GM was more interested in getting back to work rather than solving their problems.'' However, Healy said pro-union details are normally disclosed first, to persuade workers to ratify the pacts. Details that aid GM will trickle out later, he said. But a significant development that has been lacking in previous strike settlements is the prospect of labor peace until the next set of national negotiations in September 1999. For several years, GM ended strikes by adding jobs and gaining a few productivity improvements, only to face strike threats at other plants. The accords announced Tuesday clear up all significant near-term grievances between the UAW and GM. In the case of two brake plants in Dayton, Ohio, GM won a UAW pledge not to strike before January 2000. The automaker agreed not to sell or close the troubled plant before then. A 1996 strike in Dayton wrought damage similar to the Flint walkouts, shutting down 26 GM assembly plants at a cost of $900 million in just 17 days. Comerica's Littmann said the U.S. economy will absorb the impact of the Flint strikes with no difficulty, but he added that GM will have a harder time recovering. The company, which is launching a new full-size pickup truck, has lost crucial truck market share to Ford and Chrysler, which both have lower costs than GM. And as GM dealer inventories have dwindled, its rivals have been able to reduce incentives, making them even more profitable. GM also burned up $4.5 billion in cash reserves in the second quarter, leaving it less to spend on crucial new product programs and new capital investments, such as overseas production. ''One quarter of the year has essentially been given to competitors,'' Littmann said. GM must face off with the UAW again in 1999, when its national labor contract expires, and it will have to tackle many of the same competitiveness issues. Analysts expect the union to seek permanent no-close or no-sale clauses for plants such as Dayton and the Delphi East spark plug and instrument cluster plant. Failure to resolve differences in those talks could lead to a national strike against the automaker. The last such national strike took place in 1970 and lasted 67 days -- a strike rivaled in scope by the Flint walkouts.

To: Berney who wrote (566)	7/29/1998 10:50:00 AM
From: porcupine --''''>	Read Replies (1) \| Respond to of 1722

Auto analyst: "it's a win-win situation..." Wednesday July 29 8:18 AM ET Investors don't walk out on GM By CNBC's Jim Paymar General Motors (NYSE: GM) suffered some $2 billion in losses during a contentious strike by the United Auto Workers union over the last two months -- but the automaker's stock price has held strong, CNBC's Jim Paymar reports. GM shares are down slightly since the strike began, but they're still up noticeably for the year. Now that a tentative settlement has been reached between the company and the labor groups, GM's share price may make a significant move north. One of America's industrial giants, GM shut down North American operations and idled some 190,000 workers during the strike. But the company's stock is down only approximately 6 percent for the year, versus a rise of three percent for the S&P 500. (GM's stock was up $1.25 to close at $74.25 on the New York Stock Exchange Tuesday.) The walkouts forced GM to shut 25 of its 29 North American assembly plants. The automaker has said it lost production of about 21,000 vehicles a day because of the strikes, but investors were seemingly unfazed. "There is a lot of anticipation of GM going back to work and that is positively reflected in the stock price. But whether the stock price holds the gains it made over the last few days will be specifically related to whether or not GM gave up too much and got too little," said Maryann Keller of Furman Selz. Some analysts believe that large industrial concerns tend to trail the market during times of labor tensions, but companies often rebound sharply and maintain increased share value after a strike. For GM, much will depend on the terms of the settlement and what actions the company takes to increase its productivity, which lags behind Ford and Chrysler. "For investors, it's a win-win situation," said David Garrity of GVA Research. On Aug. 3, the GM board will consider alternatives to reduce costs in North America such as closing down plants with low profit margin products. "The board will probably take action in the industry - with Daimler-Benz and Chrysler changing the competitive dynamic - but I would say it's a good time for investors to buy the [GM] stock," said Garrity. With a tentative settlement, GM now has the opportunity to thoroughly restructure its operations and to create a leaner, meaner motoring machine. Wall Street analysts have been advising the company to make these changes for years. "The big step of whether GM stock will be in the low $70s or move to $80 or more a share is really going to be dependent on what steps manufacturing must take to get its capacity, costs and product portfolio under control," said Garrity. GM's future outlook will also depend on whether the company can maintain labor peace with other union locals, how fast the firm can get production lines running at full steam and whether or not GM can regain market share lost to other automakers during the strike. Some analysts believe that until GM strips itself of divisions that don't perform well and closes some of its plants, it will be a tough road going forward.