Weekly News Roundup
Delphi, UAW square off with GM in the crosshairs; new mpg requirements
Delphi, UAW, GM square off
It’s not hyperbole to claim that the future of General Motors hangs in the balance. A strike would essentially shut down GM plants, as the automaker relies on Delphi for much of the auto parts that go into its cars. With what GM estimates is a liability of anywhere between $5 to 12 billion, a strike by Delphi workers could cost the automaker upward of $1 billion a week, draining resources GM needs to complete it’s recovery.
Faced with this growing threat, as well as its own costly recovery plan and downgraded bond rating, GM had little choice but to sell 51 percent of GMAC for $14 billion, a move that gives GM some needed cash. Many auto industry watchers believe that GM is building up as much reserve cash as possible, so that they will be able to avert a Delphi strike by subsidizing union wages. Up next? Look for GM to sell its stake in Isuzu motors, and gain about $335 million.
Meanwhile, GM is also dealing with two new government investigations into its accounting practices. Previously, GM had received subpoenas regarding pension and retiree accounting, along with its Delphi transactions. According to the automaker, last week the government also sent subpoenas about precious raw material transactions, and supplier credits.