Union Strikes a Blow to GM
General Motors needs to find a new gear in the race to go electric, connected, and autonomous. Unfortunately, its workforce has its arms crossed, and strike talks are stalling.
The first female CEO of General Motors (GM), Mary Barra, has brought stability to the company. She’s brought a stable flow of car recalls and forced layoffs, ensuring a stable stock price with the help of share buybacks. Share buybacks are the finest stock market invention since sliced bread. GM buys its own shares, taking them off the market so as to increase the value of all that remain. It’s a neat little trick, but it won’t last forever. In fact, GM’s investment in itself plays by the same rules as the rest of ours. It could prove disastrous if the car manufacturer is destined for troubling times ahead.
General Motors is currently wrestling with massive changes to its industry. Electrification and autonomous vehicle trends have taken hold, with upstart auto-maker Tesla in the driving seat! Massive action is needed for the old warhorse to challenge in this new environment.
“What d’ya mean they’re on strike?” The last thing investors need right now is a walkout, but they’re not only losers as thousands of employees down tool and walk the picket line. Swathes of GM’s workforce is going without pay, upping the ante for the firm to cave in to new demands. The United Auto Workers (UAW) union is doing the talking, but said on Friday that chances of cutting a deal had “taken a turn for the worse.”
Change is a scary thing! The company is losing more than 50-million-dollars of profit every day because of this and could struggle to provide job security as a new era dawns on its core business. This has become a political hot potato as well, so some investors are snapping up GM’s dividend stock while it’s on a 10% sale. A good idea?