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American Axle Strike Causes GM to Idle Plant

In a move that already is rippling through the auto industry, about 6,500 UAW auto-parts workers hit the picket lines Thursday morning at American Axle & Manufacturing Inc. in Detroit and other cities. A 4-year contract with UAW members at American Axle, one of the world’s largest auto suppliers, expired at midnight Wednesday and the two sides could not reach a tentative agreement. By late Thursday the strike already was affecting General Motors Corp., American Axle’s biggest customer and former owner.

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by Jeffrey McCracken and Jamie Butters
Detroit Free Press Business Writers

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DETROIT — In a move that already is rippling through the auto industry, about 6,500 UAW auto-parts workers hit the picket lines Thursday morning at American Axle & Manufacturing Inc. in Detroit and other cities.

A 4-year contract with UAW members at American Axle, one of the world’s largest auto suppliers, expired at midnight Wednesday and the two sides could not reach a tentative agreement.

By late Thursday the strike already was affecting General Motors Corp., American Axle’s biggest customer and former owner.

GM said it was idling its Ft. Wayne, Ind., truck assembly plant for today’s first shift. The plant, which makes the GMC Sierra and Chevy Silverado pickups, employs 3,000 workers. GM buys most of its front and rear axles for its profitable pickups and SUVs from American Axle. The automaker planned to resume production at the start of second shift and continue for as long as possible.

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If the strike lasts through today, GM may have to idle more truck assembly plants, said spokesman Tom Wickham.

And DaimlerChrysler AG’s Chrysler Group said production could be affected next week if the strike isn’t resolved swiftly.

Talks between the union and management negotiators resumed Thursday afternoon, but no settlement had been reached as of late Thursday.

Picketing workers and other auto insiders said the hang-up was over two issues: American Axle’s push for a second tier of wages for new hires and the right to close two plants that employ 1,500: a forging plant in Detroit and another plant in New York.

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An American Axle spokeswoman said she could not comment on the content of the talks; UAW spokespeople and Local 235 leaders were not available.

American Axle was formed in 1994 when its chairman and chief executive, Richard (Dick) Dauch, led a buyout of five struggling GM parts plants.

The UAW strike against American Axle may have been unexpected, but it is not going unnoticed. Rival auto-parts makers — along with their investors and employees — are watching these talks, experts said, perhaps as closely as they followed the UAW’s negotiations with Detroit’s automakers last summer.

A key question, auto insiders said, is whether an increasingly profitable auto supplier like American Axle can get the UAW to give wage and job-security concessions. Faced with dwindling membership among automakers, the UAW has been pushing to organize suppliers.

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“Other suppliers who’ve got their UAW contract talks coming are watching, because if American Axle can get a two-tier wage they’re going to try and get one, too,” said Allan Mingus, auto analyst with IRN Inc., a Grand Rapids, Mich., auto-consulting firm.

UAW members who work at American Axle earn an average of $24 an hour, the same as their counterparts at the U.S. automakers. But American Axle wants new employees to top out at $17 an hour, union members and analysts said.

American Axle, which had 2003 sales of $3.7 billion, reported profits of $197.1 million in 2003, up from $176.1 million in 2002. Its stock closed Thursday at $37.71 per share, compared with $23.79 a year ago. For the day, its shares were down 30 cents.

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Local 235 members, who spoke on the condition that their names not be used, complained that the company wants to be able to close plants without warning and wants newly hired employees to accept significantly lower wages.

Many decried what they called the “corporate greed” of a Wall Street darling asking for a concessionary agreement.

Last summer, Detroit automakers negotiated a UAW contract that slowed raises and froze pensions, while allowing the automakers and their two biggest suppliers, Delphi Corp. and Visteon Corp., to eliminate at least 50,000 jobs.

But those five companies had seen their profits shrink or turn to losses in recent years. American Axle has been just the opposite: Sales and profits have grown to new records each year.

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Dauch often has boasted that the company has thrived in places like Detroit and Buffalo, N.Y., that other manufacturers have fled, and that he has done it with UAW labor.

He has profited handsomely from the effort. In 2002 he was paid $27.6 million, including more than $20 million in exercised stock options. As of last spring, he owned 8.1 million shares of common stock, which now would be worth more than $300 million.

Strikers said Dauch shouldn’t ask them to make sacrifices in order to keep profits growing.

“I give Mr. Dauch all the credit in the world for what he’s done, but he didn’t do it by himself,” said a picketing maintenance worker.

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On the relatively warm and sunny afternoon, strikers vowed round-the-clock picketing for as long as necessary.

Detroit police arrested five picketers Thursday morning. They were ticketed with disorderly conduct and released.

Copyright 2004 Detroit Free Press. All Rights Reserved.

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