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American Axle Pact Ratified; Supplier Gets the Right to Negotiate 2-Tier Wages

UAW members ratified a four-year contract with American Axle & Manufacturing Inc., after a one-day strike late last month that disrupted General Motors Corp. truck production. About 68 percent of the employees voted for the contract, the union said Monday. About 68 percent of the employees voted for the contract, the union said Monday.

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by Jamie Butters
Detroit Free Press Busines Writer

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DETROIT — UAW members ratified a four-year contract with American Axle & Manufacturing Inc., after a one-day strike late last month that disrupted General Motors Corp. truck production.

About 68 percent of the employees voted for the contract, the union said Monday.

The accord, which covers about 6,700 workers in New York and Michigan, allows American Axle to negotiate a two-tier wage structure that will ensure future employees never make as much as current ones, according to UAW officials.

The company had proposed an hourly wage for new employees of $13.50, allowing them to earn as much as $17.50 an hour after eight years, said Wendy Thompson, president of Local 235 in Detroit. Current UAW members earn about $24 an hour.

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But after the brief strike, the company offered to negotiate lower-tier wages at a later date, she said.

As part of national agreements covering UAW members that work for Delphi Corp. and Visteon Corp. — as well as the Detroit automakers — the companies agreed to begin negotiating lower wages for new U.S. employees of the giant suppliers within 90 days and reach an agreement within another 90 days.

“It’s the same kind of language” in the American Axle deal, Thompson said.

Her 3,000-member local voted against the deal because of the lower wages for future workers and because current workers would not get raises in the third and fourth years of the contract — raises that Delphi and Visteon workers will get.

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But the American Axle employees are getting a $5,000 signing bonus — $2,000 more than the Delphi and Visteon workers received — plus annual performance and holiday bonuses starting next year and no plant closings.

American Axle had sought the right to potentially close two plants — Detroit Forge and a plant in Cheektowaga, N.Y. — which would have cut up to 1,500 UAW jobs. An impasse over that issue, in essence, caused the brief strike.

Unlike the agreements with current workers, which are negotiated by local union leaders, lower wages for new hires are negotiated by the union’s national leadership.

Agreements with Detroit’s two largest suppliers, Delphi and Visteon, are expected by the end of the month.

“We are confident that we will have an agreement soon, and we will announce it at the appropriate time,” Robert Marcin, Visteon senior vice president for corporate relations, said in a statement Monday.

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As U.S. automakers face increasing competition, particularly from Japanese and Korean rivals, they will continue looking to cut the prices they pay to their parts-makers, say industry experts.

“Suppliers in general are going to be squeezed by automakers for lower parts prices, forcing the suppliers to reduce their own costs,” said Mike Wall, an analyst in Okemos for auto forecasting firm CSM Worldwide.

American Axle reached agreement Feb. 27 with union leaders after about 6,500 employees walked out at six factories that make gears, axles and drive shafts. The strike forced GM, which generates 80 percent of American Axle’s sales, to halt production at pickup-truck plants in Flint, Mich., Pontiac, Mich., and Fort Wayne, Ind.

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In addition to the signing bonus, workers will get 2 percent annual performance bonuses from 2005 through 2007, as well as $1,000 holiday payments in the same years, the UAW said. The contract covers two factories in Detroit and one each in Three Rivers; Buffalo, N.Y.; Tonawanda, N.Y., and Cheektowaga.

American Axle shares fell $1.06 to $37.13 at 3:09 p.m. in New York Stock Exchange composite trading. They have gained 77 percent in the past year.

American Axle is the No. 2 maker of automobile drive systems after Dana Corp. and makes parts for trucks such as GM’s Hummer H2, GMC Envoy and GMC Canyon, and DaimlerChrysler AG’s Dodge Ram pickup.

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The one-day strike interrupted production at four GM truck assembly plants.

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