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Strike Forces GM to Idle Detroit Assembly Plant

March 28, 2008
The UAW strike at American Axle & Manufacturing Holdings Inc. that has halted light-truck production at General Motors will push the automaker to close its first car assembly plant and possibly another.

GM confirmed Friday, March 28, that it will shut its Detroit-Hamtramck assembly plant, which builds the Cadillac DTS and Buick Lucerne sedans.

“GM informed employees at Detroit-Hamtramck that production will be idled following Friday’s production,” GM spokesman Dan Flores wrote in an e-mail to Automotive News. “So effective Monday, March 31st, [the plant] will be down.”

GM also may stop building the Chevrolet Cobalt and Pontiac G5 in Lordstown, Ohio, by April 4 because of a shortage of a brake parts made by American Axle, the Associated Press reported Thursday, March 27.

GM would not discuss future production at Lordstown.

“Lordstown is running regular production,” Flores said in the e-mail Friday.

GM had a 53 days’ supply of Chevrolet Cobalts and a 110 days’ supply of Pontiac G5 cars as of March 1. Buick Lucerne inventories were at 100 days’ supply and the Cadillac DTS at 59 days’ supply.

Erich Merkle, an automotive analyst with IRN Inc. in Grand Rapids, Michigan, said a shutdown of the plants would be unlikely to force GM’s hand in the monthlong American Axle strike.

“It’s a little bit of an ‘ouch,’ but it’s certainly something that’s survivable,” Merkle said. “GM could still probably afford to stand on the sidelines a little while longer.”

He said that supplies of the affected vehicles were largely in good shape, excluding the Cobalt, and that the big concern for GM is still its pickups and SUVs. Merkle said GM makes much higher profits on the sale of trucks and SUVs, but many remain on dealership lots.

GM truck inventories were equivalent to 106 days’ supply as of March 1.

The 3,650-worker strike at American Axle, which began February 26, has forced seven GM light-truck assembly plants to close, along with 22 parts operations in North America. Several suppliers also have slowed or idled plants that supply GM.

No progress has been reported in talks between the UAW and American Axle, which is demanding deep cuts in pay and benefits to remain competitive with other driveline parts makers.

GM depends on axles from the Detroit supplier for nearly all of its domestic light trucks.

Filed by Ryan Beene of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.