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GM Offers American Axle $200 Million to End Strike

May 9, 2008
Related Topics: Labor Relations, Strategic Planning, Workforce Planning, Latest News
General Motors has agreed to pay $200 million to help with employee buyouts and “buy-downs” to help resolve a crippling strike at American Axle & Manufacturing Holdings.

In a regulatory filing today, GM said the agreement is “predicated upon an expedited resolution to the ongoing strike called by the International UAW against American Axle.”

About 3,650 workers at five American Axle plants have been on strike since February 26. The strike has idled or hampered production at 30 GM plants, especially those producing pickup trucks and SUVs.

The assistance will “help bridge the gap” between the supplier and the United Auto Workers, GM spokesman Dan Flores said.

He said the carmaker wanted to see the strike ended so it “can go back to producing the cars and trucks that customers want.”

American Axle is demanding pay and benefit cuts of as much as 50 percent from its striking UAW workers to compete with other axle suppliers such as Dana Holding Corp., which just emerged from bankruptcy protection.

American Axle spokeswoman Renee Rogers said the GM assistance package “came together very quickly.” She declined to be more specific.

American Axle hopes the development will help put an end to a very costly UAW strike, she said.

Dana Edwards, chairman of UAW Local 235, representing workers at American Axle’s Detroit complex, said he hoped GM’s intervention would help preserve jobs and break the logjam in the dispute.

He said UAW negotiators would have to study whether GM’s help would allow the UAW to accept an agreement and take it to the strikers for ratification. He added that the union would try to get a resolution to the strike as quickly as possible.

GM said the strike cost the automaker $800 million in the first quarter that ended March 31. But GM executives repeatedly have said they had no desire to intervene in the strike, even as the dispute caused thousands of units of light-truck production to be lost.

Meanwhile, the UAW also has called local strikes at two GM plants that produce the hot-selling Chevrolet Malibu sedan and GM crossovers. Analysts have speculated that those strikes at GM’s Delta Township, Michigan, assembly plant near Lansing and its Fairfax assembly plant in Kansas City, Kansas, were aimed at coaxing GM into the American Axle dispute. The UAW has denied that those strikes over local contracts are related.

Last week, the president of a key UAW local striking American Axle predicted that up to half the striking workers would take a buyout to leave the company once the strike was settled.

American Axle is offering about $140,000 for each buyout. The supplier also is offering workers $90,000 each in lump sums to take a permanently lower wage and benefit package to remain at American Axle.

The company intends to close forge plants in Detroit and Tonawanda, New York, near Buffalo. The fate of American Axle’s Three Rivers, Michigan, axle plant also is up in the air.

During the strike, American Axle has doubled production capacity at its plant in Mexico to continue shipping axles and other parts to GM. As a result, a few GM operations previously idled were able to restart production.

As GM cuts light-truck production for the rest of the year, the Mexico plant now is able to supply more than 50 percent of the axles that GM will need in 2008.

GM’s Flores confirmed Thursday, May 8, that the automaker’s assembly plant in Wentzville, Missouri, near St. Louis, will restart production of Chevrolet Express and GMC Savana vans on Monday, May 12. The plant has been idled for about two months.

The UAW appears to have settled local contract disputes at a key stamping plant in Grand Rapids and a critical transmission plant in suburban Detroit. Those operations tentatively agreed to local contracts Thursday after threatening to strike over failure to have a pact.

The UAW locals have gone without local contracts for months since the UAW concluded a national contract with GM in September. Only about a dozen locals have local contracts that set down guidelines on work rules, seniority and non-economic issues not dealt with in the national master contract.

In another disclosure, GM said its former GMAC unit is negotiating for a new two-year $3.5 billion credit line for its troubled ResCap residential lending unit. GM sold a majority stake in GMAC to Cerberus Capital Management in 2006, but retains a 49 percent stake.

GM and Cerberus are negotiating to provide $750 million on a pro rata basis for the proposed credit line.

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

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