General Motors has contracted hundreds of millions of dollars of new business annually with American Axle. The union wants those axles and other parts built in UAW-represented U.S. plants, not in Mexico, said a source close to the situation.

The union demanded similar new-work commitments to end strikes at GM and Ford Motor Co. last fall during master contract negotiations.

The job guarantees are needed to salve the pain of concessions the UAW must make at American Axle to bring wages and benefits more in line with the axle maker’s competitors, said Dave Cole, chairman of the Center for Automotive Research think tank in Ann Arbor, Michigan.

“Plant investment is the quid pro quo,” he said.

American Axle CEO Richard E. Dauch is demanding that the 3,600 striking workers agree to cuts that would halve wages to about $14 an hour. That is the average wage paid by rival Dana Holding Corp.

The union is rightfully nervous that American Axle will move future GM work to its Mexican operations if progress isn’t made, Cole said.

Union sources say that is happening with axles that American Axle will supply for the redesigned 2009 Chevrolet Camaro. American Axle plans to ship Camaro axles almost 2,000 miles from its plant in Guanajuato, Mexico, to GM’s assembly plant in Oshawa, Ontario, they say.

“We’re not saying we are moving to Mexico,” American Axle spokeswoman Renee Rogers said. But without a U.S. cost-competitive wage structure, she warned, new programs could go to American Axle plants with a lower wage and benefit structure than the five company factories now on strike.

In addition to its Mexican plant, American Axle has four U.S. plants with a different, lower-compensation UAW contract that are not on strike.

Last year, American Axle idled a Buffalo, New York, plant that had expected to get the Camaro work. That plant is about 130 miles from Oshawa.

American Axle supplies axles for all GM pickups and SUVs built in North America.

The strike has idled seven GM assembly plants and hampered production at 22 other GM parts plants.  It also has halted production of the Chevy Silverado and other light trucks.

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