I've got a sneaking suspicion that GM (NYSE:GM) may be getting a lot cheaper in the near future.
This week, United Auto Workers union representatives reportedly rejected the latest contract offer from the managers of bankrupt Delphi. Word today from the UAW is that Delphi will respond by asking the bankruptcy court to toss out union contracts, a long-feared-and-expected move that might just prompt the union workers to strike.
We're still a few steps from the abyss, but if workers at GM's biggest parts supplier do go on strike, the automaker's shareholders will likely be in for a very wild downhill ride -- perhaps toward zero.
A very long but interesting Fortunearticle on GM echoed the popular opinion that a Delphi strike might be the shove that pushes GM off the ledge and into bankruptcy. I wouldn't be so quick to draw that conclusion, since GM's ability to soldier on will depend on its parts and finished inventory, as well as the duration of any hostilities. But the company's situation is certainly precarious. As I reported earlier this week, GM's sales are not going well so far this year.
GM recently admitted that it might have trouble borrowing against its credit line, and it hasn't had the best of luck trying to hawk its finance wing for cash -- a move that might provide only marginal relief anyway. Finance was getting the blame for GM's credit rating, but on the other hand, finance was the only profitable part of the company.
GM needs some kind of revenue stability to stay on life support until it can slim down, and that will be even tougher with Delphi's parts lines on hold and GM's own production hobbled.
A GM shutdown might help Ford (NYSE:F) shore up its lackluster sales, and it would probably boost Toyota (NYSE:TM), Honda (NYSE:HMC), and DaimlerChrysler (NYSE:DCX), who have been doing pretty well anyway.
A lot of people out there can't imagine an America without GM. I certainly can, and I'm not sure it wouldn't be a better place. Business is a brutal ecosystem, where even the strongest of the old lions eventually flop over, never to roar again. It may be time for this long-weakened wheezer to finally fade away.
Seth Jayson is pretty sure he won't be going long on GM. At the time of publication, he had no positions in any firm mentioned here. View his stock holdings and Fool profile here. Fool rules are here.
