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GM Says Assistance to Strike-Bound Supplier Was a Practical Decision

May 12, 2008
General Motors brass considered several options to help strike-bound supplier American Axle & Manufacturing Holdings Inc., but decided the most practical and ethical plan was to offer $200 million in assistance, a top GM executive said.

“There were a number of us involved in it and in the discussions, and collectively we evaluated several options. There were several levels of engagement and we thought that this would be the right thing to do and the right time to do it,” Troy Clarke, president of GM North America, told Workforce Management's sister publication Automotive News in an interview.

The 10-week-old strike by 3,650 UAW members at five American Axle plants has idled or slowed work at 31 GM plants in North America—primarily light-truck operations.

After saying for weeks that it would not get involved in the dispute, GM changed course on Thursday, May 8, and offered $200 million to help American Axle sweeten its buyout and buy-down offers for the rank and file. American Axle has sought cuts in pay and benefits approaching 50 percent, and GM’s assistance could be crucial in mitigating those cuts and gaining worker approval of a new contract.

GM no longer has any legal obligation to American Axle employees, Clarke said. The decision to help American Axle was both practical and ethical, he said. GM said the strike cost it $800 million in the first month alone.

“We thought it was in our best interests and the best interest of all parties to do something positive and helpful in trying to encourage the parties to reach a resolution,” Clarke said.

He said all work stoppages are painful—it just depends on the degree of the pain. GM was able to withstand the immediate impacts of the strike because of high light-truck inventories.

“Did we have a high truck inventory? Yes, that’s a true statement,” Clarke said. “Did it bleed off some of that inventory that we may have had to bleed off otherwise? I think that’s a fair statement too.

“But I don’t think it’s the kind of thing where we were on the sidelines saying, ‘Wow, I hope the strike lasts another two weeks because it gets me down to my inventory number.’”

Clarke said that GM has other ways to winnow inventory and that strikes are very volatile.

“Labor issues are complex, and [it’s] very tough to talk about these kinds of things in the press,” he said. “I do know one thing: The strike will eventually end.”

Filed by Jamie LaReau and Philip Nussel of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.