Rick Wagoner, chairman and chief executive of General Motors, the world’s biggest carmaker, has warned that a strike by workers at Delphi, its largest supplier, would “blow the place up” but was unlikely because it would be devastating to all sides.

Mr Wagoner, in an interview with the Detroit News, said a strike was likely to be avoided but could not be ruled out. Delphi, which filed for bankruptcy last month, supplies parts to every GM vehicle built in North America and a strike would be likely to halt all GM production in the region within 48 hours.

“If everybody steps back and thinks about what we really need to do here, the possibility of coming to a reasonable agreement is much, much better than the possibility of the thing blowing up,” he said. “The probability isn’t zero and we all have to recognise that. No guarantees.”

Investors have pointed to the danger of a strike as being the biggest short-term risk for GM, which plans 30,000 North American job losses in the next three years. Credit markets have priced in a risk of GM defaulting on its bonds of almost 60 per cent within five years, while shares last week reached lows not seen since the 1987 stock market crash. On Friday, the shares fell almost 3 per cent to $22.86 in thin holiday trading.

In an interview with the Detroit Free Press Mr Wagoner said GM was likely to sell more vehicles outside than inside the US this year for the first time, as Chinese sales boomed. He predicted US sales of 4.5m this year, down from 4.7m last year. Overseas sales would rise from 4.3m to 4.6m.

Delphi and its unions have been at loggerheads since the company filed for Chapter 11 protection from creditors and demanded swingeing cuts in pay and benefits. If no agreement is made by the middle of next month, Delphi has said it will ask the bankruptcy court to cancel worker contracts in mid-January.

Delphi wants GM to contribute to the rescue plan by paying some compensation to workers, although Mr Wagoner refused to comment on the talks under way with Delphi and the UAW.

Analysts believe a three-month strike at Delphi would use up all or most of GM’s $19.2bn cash pile, giving it no option but to file for bankruptcy protection.

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