UAW strike could cost GM about $1 billion - and counting

Workers at the rally

"While September sales are being reported today and arriving pretty much as forecast, the real story for the auto industry will be told in the coming weeks as Chevy and GMC dealers run low on pickup trucks to sell, with the UAW strike against General Motors leading the company to idle the plant in Mexico that makes the Silverado and Sierra", noted Cox Automotive executive analyst Michelle Krebs.

General Motors Co said Tuesday an ongoing strike by United States workers has forced it to halt production at its pickup and transmission plants in Silao, Mexico, temporarily laying off 6,000 workers. He said GM's offer came up short on many issues.

GM released a statement Tuesday, saying only, "We continue to negotiate and exchange proposals, and remain committed to reaching an agreement that builds a stronger future for our employees and our company". The plant makes light-duty versions of the Chevrolet Silverado pickup and had been supplying USA dealers with GM's top-selling and most profitable vehicle.

The UAW strike is now in its third week and negotiations appear to have slowed down.

The statements on "comprehensive proposals" indicate the talks have shifted into a higher gear as the dispute is taking a toll on both the automaker and striking UAW workers, whose US$250 a week from the union strike fund is a fraction of their normal pay.

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Just like in Canada, the Mexico plant is facing a parts shortage with US plants being shut down as the strike continues.

However, because automakers book revenue when trucks are shipped to dealers, analysts estimate that GM was losing somewhere between $50-100 million per day before the Mexican plant shut down.

Terry Dittes, the UAW's top negotiator, said as far as was concerned GM was still demanding concessions.

The moves come on top of the furlough of more than 3,000 workers in Canada and at an OH plant where GM operates a joint venture with Isuzu to make diesel engines.

Brinkman said J.P. Morgan was keeping its overweight rating on GM stock, with a price target of $53 per share. At this point, GM won't be able to recoup all of their losses from the lost output in the fourth quarter of the year even if the strike ends soon.

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