After spending the better part of a year trying to patch up relations with the United Auto Workers union, analysts say, General Motors Corp. Chief Executive John Smith finds himself in a dangerous position as he prepares to negotiate a new labor pact.
If Smith agrees to the same contract as No. 2 auto maker Ford Motor Co. did Sept. 16, including the continuation of lucrative health care benefits and increased pensions, he risks alienating thousands of salaried employees who have been forced to pay higher premiums this year.
Then there is GM’s board of directors, many of whom believe the nation’s largest auto maker should pressure the union into granting concessions so GM can continue its restructuring plan.
But if Smith decides to dig in at the bargaining table, the UAW will almost certainly launch a strike against GM just as the auto maker is trying to roll out its 1994 models.
A strike last year, over the proposed cutting of several thousand parts-making jobs in Ohio, crippled GM’s North American assembly plants and shut down production of the hot-selling Saturn cars.
The UAW on Monday set a deadline of midnight Thursday to reach an agreement with Chrysler Corp. Analysts say those talks are not expected to be as difficult as the discussions that will take place between GM and the union.
“Jack Smith has got a very difficult job,” said auto analyst John-Claude Gruet of UBS Phillips & Drew. “But he can’t back off, because we’re talking about the survival of GM. GM’s balance sheet is in horrible condition. They cannot take another three years of what the last three years were like.”
Since 1990, GM’s North American automotive operations, by far the largest component of the company’s worldwide empire, have accounted for a staggering $17 billion in losses.