Stakes Rise for General Motors and American Axle in Protracted Strike

By Staff Report

Apr. 2, 2008

Pressure is mounting in the five-week-old United Auto Workers strike against American Axle & Manufacturing Holdings Inc.

In developments over the past two days, Automotive News revealed that within two weeks the stoppage will shut production of General Motors’ hit sedan the Chevrolet Malibu. More GM car assembly plants, including its operations in Lordstown, Ohio, are threatened.

Also, American Axle CEO Richard E. Dauch placed want ads in various newspapers for possible replacement workers to restart production at the five striking plants.

And GM has moved a small but significant parts contract from American Axle to archrival Dana Holding Corp., Automotive News has learned.

Taken together, these are signs of restlessness that should bring American Axle and the UAW back in earnest to the bargaining table—and perhaps GM too, said Aaron Bragman, research analyst with the suburban Detroit office of Global Insight Inc.

“I think you’re going to see these talks take on a more urgent tone,” Bragman said.

Hot seller
GM cannot afford to lose Malibu production, Bragman said. The redesigned vehicle is one of the few shining stars in a stable that overall experienced a U.S. sales drop of 13 percent in March and 11.4 percent in the quarter compared with a year ago.

But GM is running out of a key American Axle part for the Malibu—a knuckle on the rear suspension.

American Axle is the only producer of the part for the sedans built at the Fairfax assembly plant in Kansas City, Kansas, and the Orion, Michigan, assembly plant in suburban Detroit. Within two weeks, the knuckle shortage will shut production of the G6 sedan at Orion.

GM’s role in any strike settlement probably would be limited, says Dave Cole, chairman of the Center for Automotive Research, an automotive think tank in Ann Arbor, Michigan.

So far, GM has stayed out of the talks, allowing the strike at American Axle to reduce high inventories of light trucks on dealership lots. About 30 GM plants are either closed or operating at partial capacity because of parts shortages.

GM could make a deal that allows some of the 3,650 striking UAW workers to hire in at GM at top wages if a GM buyout program opens positions, Cole said. But the automaker would want something in return, perhaps lower prices for axles and other parts, Cole said.

Cash help unlikely
What’s unlikely is that GM, which spun off American Axle in 1994, would offer cash to help American Axle buy out workers or buy down their wages in exchange for one-time bonuses, Cole said.

GM had to pay at Delphi Corp. because of UAW contract provisions that called on the automaker to help in an emergency. That’s not the case with American Axle, Cole said.

On the other hand, Cole said, GM does not want to see the strike, which began February 26, affect Malibu production.

During a conference call Tuesday, April 1, Mark LaNeve, GM vice president of North America sales, service and marketing, declined to comment on the American Axle situation, except to say that GM still had adequate inventories of most vehicles. American Axle provides axles and other parts for all GM pickups and SUVs built in North America.

In a press release Tuesday, American Axle said it had provided the UAW with additional requested information to promote bargaining. An American Axle spokeswoman did not return phone calls Tuesday.

In a statement released late Tuesday, UAW vice president James Settles Jr. said American Axle provided information originally requested by the UAW’s bargaining team on December 7.

The delay is one factor that caused the strike at American Axle, Settles said, contending the delay violated federal labor law.

The strike was also caused, according to Settles, by American Axle’s termination of disability payments, health care coverage and compensation for injured and laid-off workers.

Said Settles: “We hope the company will do what is required to meet its legal obligation to provide data necessary for bargaining—and reinstate benefits to injured and laid-off workers—so that we can settle this dispute and bring our members back to work as soon as possible.”

Filed by David Barkholz and Robert Sherefkin of Automotive News, a sister publication of Workforce Management. To comment, e-mail

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