GM (GM) has not traded above $40 since late 2004. But, that could change.
Former GM parts operation Delphi, which entered Chapter 11 after its had become an independent company, apparently has a deal with the UAW. This agreement would allow the company to exit bankruptcy and would define GM’s obligations to the union for covering pay cuts.
The peace with the UAW would benefit GM in two other ways. It would prevent a strike at Dephi, which could easily shut GM down, and it will lower GM’s parts costs. Delphi’s operating costs will be down sharply with it plant closings and exporting of jobs. GM should be the beneficiary as Delphi can offer lower prices and still keep positive margins.
If GM’s own UAW negotiations this year go well, the company may only be a few steps away from being profitable in North America again.
Douglas A. McIntyre
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