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GM & Chrysler In Union Dispute

Posted in auto industry, News, Politics by Kurt Ernst | March 25th, 2011 | Leave a Reply |

Imagine that you have a business building widgets. Widget sales are brisk, so you need to ship your product to markets all across the United States. You sign a deal with a carrier, who agree to transport your products to market for 20 cents per ton per mile; satisfied you go back to the business of building better widgets. Then the phone rings, and your carrier says, “I’m going to need $0.23 cents per mile, or I can’t haul your widgets.” You do some quick math and realize that the 15% increase will cost you a lot of money, eroding your already thin profit margin. You say that you can’t agree to the cost increase, and your carrier says “Good luck finding where we have your widgets stashed”.

What does all this have to do with cars? Substitute “GM vehicles” and “Chrysler vehicles” for widgets, and you get an idea of the dispute between the automakers and Allied Holdings, a transportation company contracted to deliver automobiles to dealers. Allied’s drivers, members of the Teamster’s Union, refused to accept wage concessions demanded by Allied and walked off the job. Allied, in turn, tried to invoice the automakers an additional 15% to cover the amount demanded by the Teamsters. The automakers refused, and the three companies are in a standoff until a U.S. District Court hears the GM case next week. Stakes are high, as GM has some $47 million worth of inventory currently in Allied’s possession. Chrysler has some 700 vehicles tied up in Allied’s Windsor, Ontario facility, but won a recent judgement giving them immediate access to 200 vehicles. The fate of the remaining 500 unit inventory will be decided by a Canadian court next week as well.

Source: Detroit News

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