Kerkorian Going in For More

I find it hard to understand Jack Kerkorian's GM (NYSE: GM) strategy.  The latest report is that he wants to up his stake further (from 9.5% to 9.9%) and possibly get some representation on the company's board.  Of course, as a nearly 10% owner of this company, it certainly seems that he deserves it.  But what's his strategy?  Nobody seems to know.  A government bailout like the kind Iacocca engineered?  Doesn't seem likely. 

One strategy is to renegotiate contracts with the UAW, angling to lower the company's labor costs.  Negotiating would seem like a wise move for the Union who stand to lose everything in a bankruptcy, so it was always perplexing why they were so hesitant. 

The answer might lie in a story we discussed on Monday about the horrible financial condition of the company's employees.  The loss of five hours of overtime per week (total), over the last 8 year has caused personal bankruptcies among their ranks to skyrocket over the last several years--even among workers still making nearly six-figures.  The Union, in otherwords, might not have even the slightest bit of flexibility to start giving up employee salary.

Presumably Kerkorian has an idea, and has done his DD, but if his plan is based on a renegotiation with employees, he might be in for some trouble.

UPDATE:  Here's a great article, From June, about GM employees:

John Sanderson takes some of the blame for what's becoming an uncertain future for him and his wife of 25 years, Barbara.

"There were smart people who saved their money -- and I was not one of them," said Sanderson, smoking a Marlboro in the living room of his tidy one-story home in the Cleveland suburb of North Ridgeville, Ohio. "It just goes back to being stupid enough to believe we were going to get all the stuff we were promised."

Sanderson worked for 32 years churning out transmissions and, later, steel parts for vehicles such as the Chevy Tahoe SUV and the Malibu sedan before retiring in 2000.

The son of a West Virginia coal miner who died on the job, Sanderson thought little of working 10- to 11-hour shifts in a plant where oily sediment coated his clothing and temperatures sometimes soared above 120 degrees.

He snatched up any overtime he could, and his family reaped the rewards. They took trips, bought nice cars and a 16-foot motorboat. Stowing away cash for later didn't cross his mind.

"In my family," he said, with a trace of a Southern twang, "you work hard and you play hard."

But now, he's paying the price.

Sanderson and his wife live comfortably on his $1,900-a-month pension and another $830 a month from her job at a grocery store. Their two vehicles, a Chevrolet TrailBlazer and a Cavalier, are paid off. They spend $800 a month to pay off refinancing on their home and a recently purchased motor home and about $600 a month on taxes, utilities and cable.

The remaining $1,300 goes toward typical expenses: food, co-pays for prescription drugs and doctor's visits. The cash also finances their favorite pastime -- traveling. The couple camps in southern Ohio, regularly makes it out to state parks and took three grandkids to the Grand Canyon.

"All I ask out of life is to live comfortable," Sanderson said.

Sanderson said he could swing an extra $100 or so a month to keep his current health benefits. But having to pay a large deductible would likely mean major cutbacks and might make it harder for his wife to retire.

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