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Truck inventories give GM hedge against strike-UAW walkout at American Axle continues

From Automotive News:

Truck inventories give GM hedge against strike
UAW walkout at American Axle continues

David Barkholz
and Robert Sherefkin
Automotive News
February 27, 2008 - 1:46 pm ET
UPDATED: 2/27/08 2:15 p.m. EST


DETROIT -- General Motors says it wasn't preparing for a strike at American Axle & Manufacturing Holdings Inc. when it increased North American truck production in January.

But the effect is that dealers have lots of inventory to weather at least a short strike at the axle supplier, which makes parts for virtually every GM pickup and SUV. Truck sales industrywide are expected to slump badly in the first quarter.

GM spokesman Tom Wickham declined to offer an explanation on the GM truck production increase, except to say, " We had an obvious need to produce them."

In January, GM's North American truck sales edged up 3.1 percent to 138,544 from 134,408 in the year-earlier period.

The American Axle strike threatens GM truck and SUV output.
About 3,600 American Axle workers represented by the UAW walked off the job Tuesday, Feb. 26, at five plants. The union has sent home union local negotiators until it can get more information from the company on why American Axle needs wage and benefit cuts that would halve the $60 per hour in wages and benefits earned today.

American Axle has banked about three days of parts in preparation for a strike. After that, parts shortages could begin to shut GM truck assembly plants. American Axle was spun off from GM in 1994.

Despite a softening truck market, GM increased North American truck and SUV production 6.9 percent in January. It built 179,246 of the vehicles in January, compared with 167,729 in the year-ago period. But for the first quarter, GM still has forecast cutting North American truck production to 608,000 vehicles from 664,000 in the year-ago period, Wickham said.

As a result of the production increase, GM truck inventories ballooned in January. For example, the automaker saw inventory for the month rise on the Chevrolet Silverado to a 153-day supply from 107 in December and the GMC Sierra to 152 days from 105.

Inventory on the GMC Yukon SUV skyrocketed to 164 days in January from 88in December.

Meanwhile, Standard & Poor's Ratings Services said in a GM update today that the American Axle strike won't have an immediate effect on the carmaker's B credit rating.

However, a strike lasting more than a few days, not weeks, would crimp GM production and hamper other GM suppliers as well.
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