The UAW deadline for a deal with Chrysler is fast approaching. Unless an agreement is reached by 11:00 AM Wednesday morning, some 49,000 UAW workers will hit the picket lines at Chrysler. In the past, UAW deals tended to be pretty typical for all of the big three auto makers. This time however, the three companies have differing needs, and the new privately held Chrysler presents interesting hurdles in the talks.
The union is seeking job security and maintained health benefits, but clearly some concessions were made by the UAW in the GM deal. There is a possibility that the current contract they are operating under could get some brief extensions if talks seem to be progressing. Many analysts feel that Chrysler's inventory situation could allow them to operate at normal sales levels for about a month if a strike happens.
For investors in Sirius, a strike will take on a role in the Q4 OEM subscriber numbers. Sirius' subscribers from Chrysler are counted at the time the subscription is paid for by Chrysler. This typically happens at the end of production of a vehicle. Prior to this negotiation, it was anticipated that Chrysler would produce between 6,000 and 6,500 units per day. With a 70% installation rate for Sirius, that equates to somewhere between 4,200 and 4,550 subscribers per day. A prolonged strike without a substantial ramp up afterwards could carry some bearings on Q4 OEM totals. It would be prudent for an investor in this sector to follow the UAW story as it develops.
Position - Long Sirius, Long XM, No Position OEM's