GM Weathers Strike; Won't Waver From Production Plans

Bob Lutz, General Motors Corp. vice chairman-global product development, isn't willing to characterize the American Axle Mfg. & Holdings Inc. strike, which as of late March had forced GM to idle more than 20 plants, as “convenient.”

But he did say on the sidelines at the New York Auto Show that a strike of a few weeks hasn't hurt the auto maker, especially given the bloated inventory of fullsize pickups and SUVs, for which the supplier provides axle modules.

Ward's estimates GM is losing more than 6,000 units of production daily due to the strike.

“If the market is red hot for pickups and SUVs, and with every day of the strike you are missing production volumes, then it becomes painful,” Lutz tells journalists.

“But when you have lots of retail inventory — I mean, lots of retail inventory for the dealers to sell down — then it puts you in a strategically better position to withstand a strike,” he says.

GM began shutting down assembly lines Feb. 28, two days after 3,650 American Axle workers went on strike at plants in Michigan and New York following a break down in contract talks.

Meanwhile, Lutz says GM will stay the course with its production plans for the remainder of the year, despite J.D. Power & Associates' bleak forecast of 14.9 million light-vehicle sales in the U.S. for 2008.

“We see no reason to depart from what we said earlier this year, which is, a weak first half and a recovery second-half overall — more or less like last year,” Lutz says.

“But obviously, like any corporation, we will react to changing conditions. Right now, we see no reason to make any drastic revisions to our forecast.”

Lutz says he is encouraged by the Federal Reserve's recent 0.75% point cut in the interest rate.

“Reading the headlines, it looks like basically the financial markets and Wall Street are reacting very favorably to this rate cut,” Lutz says.

“Stock markets have rebound upward. It should ease the credit situation somewhat and bring back consumer confidence, which is what we really need.”