General Motors Corp.'s worst-case labor scenario came true yesterday when workers at a Kansas City, Kan., factory that builds the hot-selling Chevrolet Malibu walked off the job.
GM had hoped to avoid a strike at the Fairfax Assembly plant, which is one of two U.S. factories that have been scrambling to keep up with the demand for the Malibu, arguably the automaker's most critical vehicle on the market.
The United Auto Workers launched the walkout yesterday morning after a strike deadline passed with no new labor deal for the plant's 2,600 workers.
The walkout comes during a nearly three-week strike over the local contract at GM's Delta Township plant near Lansing, Mich., where two other popular vehicles, the GMC Acadia and Buick Enclave crossovers, are built.
The prolonged strike at parts supplier American Axle & Manufacturing Holdings Inc. also is hurting GM production, forcing the automaker to stop or slow production at nearly 30 North American factories.
But no dispute has the potential to hit GM harder than the Fairfax walkout.
"It certainly couldn't come at a worse time," said Mike Jackson, an analyst with CSM Worldwide in Farmington Hills, Mich. "Their inventory is pretty lean and they want to push additional volume in light of stronger demand. There's a potential to impact sales pretty quickly."
GM has been haggling for months with dozens of UAW locals across the country over plant-level labor deals. Of GM's 77 UAW locals in the United States, 11 have ratified agreements with the automaker. Three locals are threatening strikes.
"We're certainly disappointed that UAW Local 31 walked out," said GM spokesman Dan Flores, who declined to discuss specific issues. "We remain focused on getting back to the table and reaching an agreement as soon as possible."
The union, in an online notice to members, said the strike is over seniority issues and work rules governing the factory floor.
"General Motors left us with no alternative after all-weekend meetings and no progress to speak of - the choices were none," the notice said.
GM had about 36 days' worth of Malibus in stock as of Friday, barely half of the 60-day supply that's considered ideal in the auto industry, according to Ward's Automotive Group. The Fairfax factory also builds the Saturn Aura sedan.
The Malibu has been in high demand since it was launched in November. Sales in April were up about 40 percent from a year ago. The Malibu has been selling in larger numbers than its predecessor and is selling for about $4,000 more on average than the previous model.
The Malibu is widely considered GM's best chance in years to challenge the perennial favorites Toyota Camry and Honda Accord in the huge midsize car segment.
The strike, however, isn't likely to cause immediate problems for GM. The automaker has some room to shuffle production. GM also builds the Malibu at its Orion, Mich., plant, alongside the Pontiac G6 sedan.