The United Auto Workers Union and GM talks have continued throughout the weekend and conflicting reports are reaching union members. Rumors that talks were progressing have been mixed with rumors of a strike starting Monday morning. GM is the lead in negotiations for a new contract. Ford and Chrysler also have expired contacts, but all three of the U.S. automakers are working under extensions of the recently expired contract.
In my opinion, a Monday Morning strike is very unlikely, and more likely than not the two sides will use the day to try to get to some sort of resolution. The auto industry has many challenges facing it, including a retired work force that at this point may well outnumber the active work force. One of the biggest bones of contention is the health care package, which has become a cash drain to all of the big three auto makers.
All U.S. automakers have seen market share erode over the past couple of years, and There seems to be no sign of that trend letting up. If there is any realistic hope of GM, Chrysler and Ford getting back into the race in a meaningful way, the UAW will have to be a part of the process.
A strike to make a point is one thing, but if it were to drag out, the impact on the industry could be huge.
Satellite Radio investors should keep tabs on this issue because GM, Chrysler and Ford are major contributors to the OEM channel for Sirius and XM. The GM deal with XM is sales driven. A short term strike would likely carry little impact on XM, as GM has an inventory of nearly 1,000,000 vehicles, and dealer sales would continue unabated even if production were slowed. On the flip side, Sirius' deals with Chrysler and Ford are production centered. If production slows, subscriber growth will be impacted.
Sirius Buzz will keep you informed as this story continues to develop.
Position - Long Sirius, Long XM, Long Ford, No Position GM