“As goes GM, so goes the nation.” That was certainly true in the 1950s, when the statement supposedly was made by the company’s CEO during Congressional testimony. But it is not even remotely true any longer. GM still matters, of course, just not much. Striking workers have idled 30 auto plants across the nation for 16 days, which, believe it or not, is the longest such shutdown in nearly 50 years. At issue are pay and benefits for 46,000 full-time factory employees. We should wish them good luck. And their employer, too, while we’re at it.
As far as Wall Street is concerned, because GM makes actual things and employs men and women who get their hands dirty, the company might as well be manufacturing lavatory pucks. The financiers love companies with ‘disruptive’ business models that put everyone out of work. GM, unfortunately, is a conspicuous disruptee. The last of the dinosaurs.
$100 Million Rounding Error
The automaker supposedly is losing between $50 million and $100 million per day, but that’s just a rounding error compared to the daily price swings in the shares of two glorified advertising agencies that portfolio managers cannot get enough of: Facebook and Google. GM shares are near the middle of a $20 range that has contained them for the last five years. A glance at the chart suggests that unless the strike stretches on for another month or two, the stock will not likely fall more than an additional $1 or $2 before picking up structural support from a key low at 35.58 recorded on August 28.
The company reportedly has $17 billion in cash to tide them over; workers are getting strike pay of $250 per week. Can you guess which will win? Careful, because that’s a trick question.
Comments on this entry are closed.
Likely, both sides will “win” as soon as a reasonable accommodation is reached (each side gives and they meet in the middle)… But, on the other hand, perhaps management will win in the long run because the US jobs can always be given to Mexicans.