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Strike at GM plant may hurt production of Chevy Malibu

The walkout in Kansas adds to troubles for the automaker, which has seen strong sales for the redesigned sedan.

May 06, 2008|From the Associated Press

A strike Monday by a United Auto Workers union local at the General Motors Corp. plant in Fairfax, Kan., could endanger production of the popular Chevrolet Malibu sedan, adding to mounting problems for the automaker.

Employees at the plant set up pickets in medians and at the gates and vowed to stay out for as long as necessary to get a contract.

The strike is particularly important to GM because the plant produces the Malibu, a medium-size sedan that was named "Car of the Year" at this year's North American International Auto Show in Detroit.

The redesigned 2008 Malibu has posted strong sales since its launch last fall, as drivers reacting to high gasoline prices and the struggling economy moved away from trucks and sport utility vehicles.

The strike comes on the heels of another walkout that began April 17 at a GM plant in Delta Township near Lansing, Mich. Other UAW locals in Wyoming and Ohio are negotiating.

Jeff Schuster, executive director of global forecasting for J.D. Power & Associates, said GM needed to settle the local union strikes quickly because it had only a 30- to 40-day supply of Malibus and a 40- to 50-day supply of large crossover vehicles such as the Buick Enclave. A 60-day supply is optimal by industry standards.

"These are going to start impacting volume as well as market share and profits," he said.

GM announced last week that it lost $3.3 billion in the first quarter, largely because of one-time charges and North American losses that offset gains in the rest of the world.

The company had pinned some of its hopes for a rebound on the Malibu. From January through April GM sold 58,126 Malibus, up 32% from the same period last year. Sales were up 55% in April.

GM shares fell 84 cents, or 3.6%, to $22.36 on Monday.

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