GM Tries to Gear Up After Crippling Strike : Autos: The walkout by 3,500 workers at an Indiana parts facility led to the idling of 15 assembly plants.
General Motors Corp. worked Friday to revive car and truck assembly lines idled when they ran out of lights and bumpers built by a single strike-closed factory in Indiana.
The walkout at GM’s Inland Fisher Guide plant in Anderson ended Thursday, but the effects continued to be felt at the nation’s leading auto maker, demonstrating its vulnerability to supply disruptions.
By midday Friday, 15 GM assembly plants from Quebec to Kentucky had laid off more than 46,000 workers and stopped building vehicles ranging from best-selling pickups to Corvettes and Camaros.
Three truck plants were reopening later Friday, thanks to the quick shipment of nine loads of Anderson parts built before the strike. But GM spokesman John Shea said more assembly plant closings were “very possible” and that no others were likely to start back up before Monday.
The three-day strike by 3,500 people--about 1% of GM’s North American work force--was able to hobble half the company’s vehicle plants because of a “just-in-time” supply system that has become standard for modern manufacturers.
By building, shipping and using parts as they are needed, businesses cut inventory and storage costs and can be more flexible, changing or improving components as they go.
“If you’re going to be efficient, lean and responsive to customers, a just-in-time system is what you need,” Shea said. “But if you should have something like a strike, or you need to work out problems with your suppliers . . . there’s less room for error.”
In GM’s case, there seems to have been no room.
The plants that closed apparently did not have suppliers other than the Anderson facility for the exterior lights, bumpers and lighting controls needed to build the cars and trucks.
GM would not confirm that, but Shea said, “Clearly, you can conclude they’re a significant supplier.”
Ironically, the strike at Anderson was caused by GM’s desire to use an outside source for some parts. GM wasn’t looking to add another supplier but to produce bumpers more cheaply than it can at Anderson with workers whose pay and benefits are estimated at $42 an hour.
“Probably there are independent suppliers who have labor costs one-third of that,” said analyst David Healy of S.G. Warburg & Co. in New York.
GM would not say how the strike was resolved. But a letter released by the United Auto Workers said the company will add 19 products and keep the plant’s current product line through 1997, suggesting that the company capitulated to the UAW local’s demands.
The strike was another reminder of the UAW’s ability to hamstring some of the auto maker’s efforts to cut its costs by buying parts from outside suppliers.
Generally accepted estimates are that GM builds about 70% of the parts it uses. Chrysler Corp., the domestic industry’s leader in efficiency and profitability, buys about 70% from outsiders.
The trade journal Ward’s Automotive Reports estimated that GM will forfeit production of 20,000 vehicles because of the plant closures.
Analyst Ron Glantz of Dean Witter Reynolds Inc. in San Francisco said the company could recover from that fairly quickly.
“Some sales are permanently lost” when a car or truck isn’t immediately available to a buyer, Glantz said. “But when you’re talking about losing 20,000 units, in most cases dealers have enough inventory so it doesn’t make a difference.”
More important, Healy said, is GM’s predicament in trying to balance cost cutting with the union’s success at guaranteeing job security for its members with strikes like that at Anderson.
“I think the real damage took place last fall when GM failed to get any concessions on the wage packages for their components employees,” Healy said, referring to GM’s national contract with the UAW.
GM stock rose $1.375 to $51.75 on the New York Stock Exchange.