Two Reasons The UAW Strike Against GM Has Entered A Third Week

As the United Auto Workers' strike against GM enters its third week, there are two reasons why GM hasn't hurried its concessions.

The United Auto Workers' strike against General Motors has now entered its third week. The strike began on September 15th and as of this morning, negotiations on how much more money, benefits, and other compensation the hourly union workers at GM will earn in the upcoming contract has not yet been determined. There are many reasons why the strike has happened, but there are two that help explain why GM has yet to agree to the concessions the UAW is demanding.

UAW-GM Strike - Inventory
One big reason that GM has not yet agree to meet the demands of the UAW is that the company's independent retail dealers are nowhere near to be ing out of vehicles. At the request of the author, iSeeCars.com researchers estimated how many "days of inventory" GM's dealers are presently in possession of. Rather than every individual model, the researchers focused on GM's individual top sellers at each brand.

As you can see, GM's inventory of its most important models is solid. In fact, it may be unusually large, unless one considers that GM knew a strike was likely. In order to prepare for the upcoming strike action against it, GM allowed inventory to build. This provides a cushion for dealers and allows GM time to negotiate without feeling as if customers are without vehicles.

UAW - GM Strike - Opportunity Cost
Many of the stories you will read about the strike focus on how much money each side in this labor contract negotiation is "losing." So far, the GM workers have missed one paycheck. The union strike payments are ready to go, but have not yet been delivered to the workers. That is entirely the UAW's choosing. Strike pay could have been issued on day one. Despite the threat of having to pay for the health benefits the workers receive from GM, GM reversed its decision to stop paying its portion of striking workers' health benefits. So workers who are not working are receiving company-subsidized health care benefits.

Many articles are also discussing how much "profit" GM is losing due to the strike. However, profits are calculated annually and estimated quarterly at public companies. GM hasn't lost any profits yet, because the final tally isn't done. Some experts in automotive contracts estimate that the difference between a contract favorable to GM and one that is not is as much as $500 million. A half-billion dollars in opportunity cost is well worth a temporary loss of revenue to a company that will again be faced with a strike action once the contract now being negotiated ends.