American Axle Workers Strike After Failing to Reach Contract Deal

DETROIT – American Axle and Manufacturing Holdings Inc. said early Tuesday its workers went on strike after the auto parts supplier failed to reach a new contract agreement with the United Auto Workers union.

American Axle spokeswoman Renee Rogers said workers were striking after a Monday midnight deadline passed without a new contract agreement.

American Axle has 3,600 workers at five U.S. plants in Michigan and New York.

Rogers says talks between Detroit-based American Axle and the UAW had broken off for the night and she didn't know when they would resume.

The strike could be damaging to General Motors Corp., American Axle's former parent. GM makes up nearly 80 percent of American Axle's business. The supplier had been stockpiling parts in the event of a strike.

The UAW said American Axle is demanding wage reductions of up to $14 an hour as well as elimination of future retiree and pension benefits. The UAW said the company failed to provide the union with enough information to evaluate its proposals.

"The UAW has a proven record of working with companies to improve their competitive position and secure jobs," UAW President Ron Gettelfinger said in a statement. "But cooperation does not mean capitulation. Our members cannot be expected to make the extreme sacrifices American Axle is asking for with nothing in return."

American Axle Chairman and Chief Executive Richard Dauch said the union should give the company the same wage concessions it has agreed to at other suppliers and automakers.

"All of the changes we have proposed have been accepted by the UAW in agreements with our competitors in the United States. I have no idea why AAM is being singled out for a different set of economic conditions," Dauch said in a statement.

Outside a manufacturing facility near its headquarters early Tuesday, workers carried picket signs as snow fell that was expected to total 3 to 5 inches by day's end. In barrels that were unloaded from a trailer at picket sites, wood was being burned to help keep strikers warm in the 30-degree temperatures.

Neal Sandusky, a millwright from Imlay City who has worked for American Axle since 1994, said wages and benefits were among his top concerns. He said workers were prepared for the possibility of a long strike.

"On the union side, we're well prepared," Sandusky, 48, said in a telephone interview from the picket line. "We're ready for it."

The UAW's recent contracts with the Detroit Three automakers, which established lower wages for thousands of non-assembly workers, have set the stage for tough negotiations at some of their suppliers.

American Axle's manufacturing workers can make up to $65 an hour in wages and benefits, which is on par with assembly workers at GM, Ford Motor Co. and Chrysler LLC. The company wants to cut that to $20 to $30 an hour, which would be similar to the agreements reached between the UAW and non-assembly workers at the Detroit Three as well as other auto suppliers such as Dana Corp. and Delphi Corp.

The UAW agreed to lower the wages for starting workers at American Axle after a one-day strike in 2004. But Rogers said American Axle has hired so few new workers since 2004 that it has seen little advantage. Of the company's five UAW-represented plants, including one scheduled to close soon in Buffalo, N.Y., only the Three Rivers driveline plant has workers making the lower wages, which start around $13.50 per hour.

Himanshu Patel, an industry analyst with J.P. Morgan Securities Inc., said the UAW's previous agreements will make it hard for the union to argue that American Axle should have higher wages.

"The UAW's decision to classify all of the hourly workers at Ford's and Chrysler's in-house axle plants as 'noncore' is a major precedent indicating that the UAW leadership philosophically agrees that the manufacturing of axles is not a $60-$70 per hour job," Patel said in a note to investors.

Key Banc analyst Brett Hoselton predicted American Axle will achieve substantial cost reductions through wage cuts as well as changes in health benefits for active and retired workers. As part of their contracts, GM, Ford and Chrysler agreed to the formation of a UAW-trust that will take over their retiree health care obligations in 2010, but it's not clear whether such a trust will be part of the American Axle agreement.

Hoselton also told investors that American Axle has adequately prepared for a strike by stockpiling parts.

American Axle earned $37 million in 2007 on sales of $3.25 billion. The company said attrition programs — including the buyout of 558 workers in Buffalo — and other restructuring efforts cost it $88.4 million.

American Axle's U.S. hourly work force has been cut almost in half since 2004 thanks to two buyout programs and worker attrition. At the same time, the company has been expanding aggressively overseas. American Axle didn't have any plants outside the U.S. 12 years ago, but now has facilities in 12 countries, including plants in China and Poland.

The UAW said Tuesday it has proposed changes that would reduce American Axle's labor costs and make its U.S. plants more competitive. But it said the company has consistently moved work to Mexico if the UAW didn't agree to its demands.

American Axle said it has invested $3 billion in its U.S. plants since it was spun off from GM in 1994, and will continue to invest if it can win a competitive wage agreement. But it warned that future business at the plants "is in immediate jeopardy" without such structural changes.