If no one's on the shop floor, does the automotive assembly line make a sound? General Motors' (NYSE:GM) shop floors are undoubtedly a lot quieter this morning with the union workers on strike.
Representatives from GM and the United Auto Workers have been in tense negotiations over the past several weeks, pushing well beyond the original contract deadline. These are critical talks, because while GM is not speaking directly for the rest of the Big Three, it's still setting the bar for the UAW's subsequent talks with Ford (NYSE:F) and Chrysler.
That bar just got knocked off the standards, but GM still has a chance to vault to new heights. The UAW hasn't walked away from the bargaining table.
The main sticking point here isn't the company's staggering health-care liability. While it's unclear how much of that $50-billion-plus burden the company ought to shoulder, the union appears to agree in principle that a voluntary employees beneficiary association (VEBA) is a prudent way to improve GM's financial health. A VEBA would effectively allow GM to move this liability off the company's books, which would improve its creditworthiness and lower its cost of capital.
No, what's gumming up the works appears to be the matter of job security. Looking at GM's incredible shrinking workforce, I can't really blame the union for feeling vulnerable. And I don't know how the company will be able to guarantee employment when its No. 1 goal appears to be to get labor costs in line with competitor Toyota (NYSE:TM).
Nothing focuses the mind like a nationwide walkout, so I'll be eager to see what plan GM devises under these difficult conditions.
