UAW Strikes at American Axle Resulting in GM Idling Truck Plant in Michigan

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Researched by Industrial Info Resources (Sugar Land, Texas)--The United Auto Workers union (UAW) (Detroit, Michigan) walked out just after midnight on Tuesday, February 26, 2008, at five American Axle & Manufacturing Incorporated (NYSE:AXL) (Detroit) facilities in Michigan and three facilities in New York, initiating their third auto-industry strike in the last six months. Approximately 3,600 workers walked off the job and into the snow to begin picketing once negotiations broke down on a new four-year contract with the automotive supplier.

As a result of the walkout, General Motors Corporation (NYSE:GM) (Detroit) was forced to idle its Pontiac truck assembly plant, which manufactures the Chevrolet Silverado and GMC Sierra pickup trucks, temporarily on Thursday, February 28, 2008, after the first shift, citing a shortage of parts. The temporary closure puts an additional 2,500 hourly and salaried workers out on the streets. However, because of the nature of their contract, the hourly workers will continue to receive the majority of their pay during the closure.

American Axle had begun stockpiling parts during the ongoing negotiations with the union and is now supplying GM, which accounts for approximately 80% of its business, as well as its other clients with those supplies. The tier supplier manufactures all the axles for GM's full-sized pickups and sport utility vehicles, so if the strike continues for a number of weeks, additional GM plant closings will be necessary. However, the strike is not expected to hurt the automaker, as it currently has a 150-day-plus day supply of pickups within its distribution system already. If the strike does become prolonged, other suppliers may be forced to close their doors, as well, once GM takes similar action.

American Axle is seeking wage reductions to the order of $14 an hour as well as the elimination of future retiree health care and defined benefit pensions, which is similar to the type of arrangement the Detroit Three were each seeking with the UAW late last year during their own negotiations with the union. A number of additional domestic automotive suppliers have also received similar deals in recent negotiations. American Axle reports that its current all-in-labor costs exceed $70 per hour.

The American automotive industry has been struggling for a number of years with massive losses reported by the Detroit Three and along with numerous supplier bankruptcies and plant closures. All three of the Detroit Three are in the midst of major restructuring plans which have included massive buyout offers to their workers as they all attempt to reduce overall costs. With Toyota Motor Manufacturing North America (NYSE:TM) (Torrance, California) poised to take firm control over the No. 1 sales slot in 2008, the reorganization efforts of the Detroit Three have become even more significant. With the country knee deep in a recession, the near term is not looking bright for the industry.

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