Strike’s effects taking hold

The effects of the day-old General Motors Corp. walkout began to ripple through the automaker’s vast North American operations Tuesday as talks aimed at returning 73,000 workers to their jobs continued.

The strike halted GM’s daily U.S. production of 12,550 vehicles and idled plants that make transmissions, engines and other parts. About 3,000 workers were laid off at GM’s biggest Canadian assembly plant, and the company was considering closing a second Canadian facility. Production could also be affected at GM’s three plants in Mexico.

Parts suppliers Delphi Corp. and Lear Corp. began slowing production as orders dried up from GM, a major customer.

The Teamsters union, in sympathy with the United Auto Workers, is refusing to haul GM parts or vehicles, exacerbating the company’s problems.

Neither side would comment on the status of the talks between GM and the UAW, which are working on a new four-year contract.

Analysts said they were encouraged that negotiators were meeting as workers walked the picket lines outside assembly plants, parts warehouses and other facilities around the country.

Although many observers have been predicting a short strike, there’s no guarantee.

“That’s the big question everyone is asking, and no one knows the answer,” said Michelle Krebs, editor of the website Edmunds AutoObserver. “There’s optimism that they’re moving closer to a deal -- but didn’t we hear that last week?”

The ripple effects were an early sign that the strike, if it drags on, could hurt an already shaky U.S. economy.

U.S. automakers may not wield the economic clout they once did, but whatever income is lost during the current walkout “is gone forever,” Merrill Lynch & Co. economist David A. Rosenberg said, “and the U.S. economy is currently operating at a very low pace and thus is more vulnerable to ripple effects if the strike is protracted.”

Estimates vary on how much the strike is costing GM. David Healy, an analyst with Burnham Securities, figures the Detroit automaker is losing $325 million to $350 million a day.

Analysts for consulting firm Global Insight Inc. wrote in a report Tuesday, “If the strike is settled within two weeks, GM will suffer little financial impact.” They noted that the automaker had about $32 billion in cash on hand.

Beyond that, GM could begin burning through $4 billion a month, the Global Insight analysts said.

GM dealers are concerned about running out of hot-selling models such as the Buick Enclave and the GMC Acadia. Although GM has an estimated 80 to 100 days of finished vehicles in inventory, supplies of those models and other popular vehicles such as the Chevrolet Impala and Equinox are much tighter.

“What happens to the consumers who walk into a GM dealership and there are very few Enclaves to choose from and none in the color they want?” Krebs asked. “Some may be willing to wait, but others may just go to the Ford dealer.”

Wall Street is betting that the strike won’t be too devastating. GM’s stock slipped 32 cents to $34.42 on Tuesday and is down less than 2% since the strike began.

The UAW is at loggerheads with GM, Ford Motor Co. and Chrysler over a range of issues, including healthcare benefits, wages, pensions and job security. The UAW’s old contract expired Sept. 14. The union granted extensions to Ford and Chrysler while it focused its bargaining efforts on GM.

Efforts to create a trust fund to take over GM’s $50-billion-plus retiree healthcare obligations were a primary topic in the talks with GM. But it was the issue of job security that pushed the union to call a strike.

“We want to keep work here in the U.S. We want local plants to have work here in the U.S. It’s about the middle class and their ability to achieve the American dream,” said Ray Wood, president of UAW Local 14 in Toledo, Ohio.

The UAW wants to keep plants open that GM is likely to want to close as part of its current restructuring. Particularly vulnerable are U.S. plants that make small cars, which yield small profit margins and can be made more cheaply overseas.

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martin.zimmerman @latimes.com