Wednesday, February 27, 2008

American Axle strike issues getting heated

Observers: Union seeks to affect car production


In what could be a sign of a prolonged strike against American Axle & Manufacturing, UAW negotiators from out of town were sent home Tuesday, and no talks were expected Tuesday night or scheduled for today.About 3,600 workers started picketing when the previous 4-year contract expired Monday night. Union members stayed out all Tuesday as snow fell, and union officials complained of unfair bargaining.

Industry observers and those involved in the strike say the union's key leverage is not so much in halting American Axle's output, but in disrupting production at its largest customer, General Motors Corp.

Whether GM starts to feel the strike against American Axle in a few days or a couple of weeks may dictate how long this strike could last, analysts said.

GM would not indicate how long it can withstand the supplier's strike, but an official said production was not affected Tuesday.

Detroit-based American Axle, which relies on GM for 80% of its sales, makes axles for GM's large truck and SUV lineup, which is under increasing competitive pressure. American Axle is a key supplier to at least 10 GM assembly plants.

"Logic would say that the customer has a voice in the room now," said Van Conway, founder of the Birmingham-based consulting firm Conway, MacKenzie & Dunleavy.

Production at Chrysler, American Axle's second largest customer, also continued, the automaker said.

Steep cuts upsetting

The UAW put most of its American Axle workers -- 3,600 people -- on strike early Tuesday morning, protesting the company's proposed reductions for wages and benefits.

Those proposals included cutting wages, which average about $27 an hour, by as much as $14, raising co-pays and terminating vision benefits.

The steepness of those proposed cuts brought hundreds of American Axle workers, bundled in Carhartt jackets, hoods and thick work gloves, to brave the wet, sticky snow that pounded American Axle's cluster of royal blue plants that straddle Detroit and Hamtramck.

UAW member Doug Elliott said he is prepared financially to withstand a two-week strike. To do that, he said he worked overtime shifts in recent weeks, which he guessed would be used to bank parts for American Axle's customers.

"It's a Catch-22," Elliott said. "Everybody at work knows that the company was building up stock to withstand a strike. ... I have got to do everything that I can do as a husband, as a father, to try to get my family through this."

Elliott, 49, of Warren said he picketed Tuesday so his family wouldn't have to sacrifice more in the long term if he were forced to take a wage cut.

Negotiators standing by

American Axle was ready to resume negotiations Tuesday, said company spokeswoman Renee Rogers.

Union negotiators are also on call, but they are demanding information that American Axle reportedly used as a basis for its concession demands, according to people familiar with the talks.

American Axle contends that it has not violated any labor laws.

"We have honored our duty to negotiate in good faith. ... We have provided the union with all the information they're entitled to receive," said Rogers, the spokeswoman.

The company has said repeatedly that it needs lower wages to compete with rival axle maker Dana Corp. and in-house axle operations at the automakers, which won second-tier wages and benefits in last year's UAW negotiations.

Workers say they already agreed to a two-tier wage for new hires, which was included in the last contract -- a contract that came after a day-long strike in 2004.

Despite a company-wide buyout program, American Axle says it doesn't have open positions at those lower rates and isn't saving money based on the prior contract.

But with the company making money and winning contracts, the union is in no mood to give steep concessions.

"Our members cannot be expected to make the extreme sacrifices American Axle is asking for with nothing in return," UAW President Ron Gettelfinger said in a statement.

Wall Street analysts said the demands by American Axle, whose stock trades under the ticker symbol AXL, were more than they had expected.

"These demands by AXL are well above the concessions we have been expecting out of the contract, leaving room for the company to back out of some requests and for the UAW to agree on large concessions," Lehman Brothers auto analyst Brian Johnson said in a note to investors Tuesday.

In a note to investors, KeyBanc analyst Brett Hoselton referenced a part of the company's proposal that included closing four plants, most likely two plants in New York, and a forging plant it has as part of the Detroit campus.

Such a move "is a very big deal and well outside the scope of what we expected," he wrote.

Johnson pointed out that the messages coming from the company and the union "may point to a wider disagreement between the two parties and to a more genuine type of strike than the ones observed at GM and Chrysler," last summer.

But Johnson said the strike should lead to significant savings for the company.

"We believe that a final agreement is likely to be reached within the next few days," Johnson wrote.

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