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Strike would have a mixed effect on GM, analysts say

Strike would have a mixed effect on GM, analysts say

As United Auto Workers union members prepared for a possible strike Friday against General Motors Corp., analysts said a short-term walkout probably would not cause too much financial pain but could hurt the automaker's launch of some critical 2008 vehicles.
Negotiations were under way Friday afternoon ahead of the midnight deadline to agree on a new contract, GM spokesman Dan Flores said.
"We are fully committed to working with the UAW to develop solutions together to address the competitive challenges facing General Motors," he said. "We remain focused on reaching a tentative agreement as soon as possible."
Union officials said they were told to expect a telephone call from Detroit about 10 p.m. EDT telling them whether they should strike or stay on the job.
The UAW chose GM as its lead company and possible strike target Thursday. Typically, the union negotiates a contract with the lead company and then presses the other two Detroit automakers to accept the same terms. Ford Motor Co. and Chrysler LLC have extended their contracts indefinitely, although talks are continuing and either side could break off the contract extension with three days' notice.
The UAW could strike GM after the midnight deadline, or the two sides could continue negotiating and workers would be covered by the terms of the old contract. Jim Graham, the president of UAW Local 1112 in Lordstown, Ohio, said his local union was awaiting word from the union and was ready to strike at midnight Friday.
"We are already set. Everything's in motion," Graham said.
GM had a 65-day supply of vehicles at the end of August, slightly lower than the 67-day average for the U.S.-based automakers, according to Ward's AutoInfoBank. Paul Taylor, chief economist for the National Automobile Dealers Association, said the ideal is a 60-day supply, so that indicates GM did not build up its inventory in anticipation of a strike.
Taylor said a short strike could actually help GM reduce its inventory of pickups. Right now, the Chevrolet Silverado stands at a 90-day supply, higher than the industry average of 81 days for pickups. GM announced last month that it plans to cut 1,200 jobs at one of the plants that makes the Silverado, and a strike could speed that process.
But Taylor said a longer strike, or a strike that could hurt hot-selling vehicles, would be disastrous. The Buick Enclave crossover, for example, has only a 24-day supply and is leading a revival of the Buick brand. Taylor said Asian automakers have enough inventory _ an average supply of 45 days _ to pick up the slack if GM's supply diminished, which would also hurt the company.
"I see some posturing to let them know a strike is still a tool that can be used, but it's like bleeding both patients in the negotiations with leeches," he said. "It would bleed both sides to death."
Catherine Madden, an auto manufacturing analyst with Global Insight, said GM has done a good job of controlling its inventory this year compared to past years. She fears a strike would hurt the company's rollout of 2008 model year vehicles, particularly the Chevrolet Malibu sedan.
"We're forecasting a very bleak year for 2008, with no growth," she said. "A strike could push things in deeper and exacerbate what's already going to be a difficult year."
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Associated Press Writer Marv Kropko in Cleveland contributed to this report.