Reputation of Detroit 3, UAW seen as casualty
The United Auto Workers strike against General Motors Corp. is unlikely
to have any immediate impact on Ford Motor Co. and Chrysler LLC, but
that could change if workers stay on the picket lines for an extended
The most immediate threat to GM's Detroit rivals is in the financial
markets. And in the long-term, a prolonged walkout at GM could hurt
suppliers, creating a ripple effect throughout the entire industry.
A long strike could give Ford and Chrysler an opportunity to pick up
some of GM's market share, but that would also signal intransigence on
the union's part that would be bad news for all three companies.
But the biggest impact of this strike -- whether short or long -- is
likely to be this: It will deal yet another blow to the public's
perception of the U.S. auto industry, the UAW and Detroit.
The markets seem to have taken Monday's labor action in stride, but
analysts say investors could soon sour on the domestic automobile
industry, sending Ford's stocks and bonds plummeting, and make it harder
for the automaker to borrow cash.
Chrysler is no longer traded publicly.
"Chrysler is almost immune to it, but it will make Ford's life more
difficult if they have need for more capital," analyst Bradley Rubin of
BNP Paribas said.
Standard & Poor's credit analyst Robert Schulz said all three Detroit
automakers are currently rated "B with negative outlook," putting them
deep into junk bond territory.
He and his colleagues are watching the situation closely. Their biggest
concern is how the GM strike could impact suppliers.
"To the extent that it hits the supplier industry, that could impact
Ford and Chrysler as well," Schulz said.
Sources familiar with the situation in Dearborn told The Detroit News
that while Ford is not worried about a short-term walkout, there is
concern that a longer strike could impact the entire industry.
Both Ford and Chrysler can expect the strike at GM to increase tensions
on their own factory floors, but it is unlikely the walkout will spread
to those automakers. It also is unlikely that the UAW would resume
negotiations with either Ford or Chrysler while still striking GM -- at
least at this point.
"Our goal right now is to get back to the bargaining table at General
Motors and try to bring as quickly as we can a (resolution) to the
situation that we're in right now," UAW President Ron Gettelfinger said
during a press conference at Solidarity House Monday.
A prolonged walkout could give Ford and Chrysler a chance at nabbing
some of GM's customers -- with production stalled and Teamsters refusing
to deliver GM vehicles to dealerships.
'Nobody looks good'
"It would only benefit them if it goes on for a long time," said analyst
Jim Hall of AutoPacific. "But that would suggest that the union is more
militant, which would be bad news for them, too."
The real beneficiaries of an extended impasse would more likely be GM's
"The whole thing just casts a bad light over the industry, over Michigan
and the union," said analyst Rebecca Lindland of Global Insight Inc. "It
would be bad for Ford and Chrysler. They would also be hurt. Nobody
looks good in this situation. Nobody really wins here."