American Axle strike shuts GM plant
Thursday, February 28, 2008
American Axle strike shuts GM plant
It’s latest fallout as auto industry upheaval stirs up labor unrest.
Eric Morath and Sharon Terlep / The Detroit News
General Motors Corp. will shut down its Pontiac truck plant today, forcing the layoff of about 2,500 workers, in the first major fallout from the UAW’s strike against auto parts maker American Axle & Manufacturing Holdings Inc.
GM needs parts from Detroit-based American Axle to build the Chevrolet Silverado and GMC Sierra pickups at the Pontiac factory. GM spokesman Tom Wickham said work at the plant will stop after today’s first shift.
There won’t be an immediate shortage of the pickups because the automaker has enough vehicles in inventory to meet consumer demand for three to four months.
But talks between the United Auto Workers union and American Axle are stalled and a prolonged strike could idle at least 10 GM factories that depend on products from the supplier.
The shutdown of the Pontiac plant exemplifies the impact of labor unrest in the auto industry, something experts say is likely to become more common as automakers and suppliers push to cut or at least control labor costs.
Another walkout could come today at Livonia-based TRW Automotive Holdings Corp.’s Windsor plant.
The Canadian Auto Workers union set a 3 p.m. deadline to agree on new contract terms before it strikes a factory that provides suspension components to Chrysler LLC’s Windsor minivan plant. The CAW is pushing for higher wages.
Auto strikes have been rare in recent years, but the UAW has staged walkouts at GM, Chrysler and American Axle in just the past six months.
Walkouts against suppliers and automakers may be an unavoidable part of the process of achieving the gut-wrenching wage and benefit cuts needed to keep North American manufacturing competitive — especially as potentially contentious CAW contract negotiations begin later this year, said Craig Fitzgerald, a partner in Plante & Moran PLLC’s automotive practice.
Such standoffs could spread across the industry. "It only takes two to four days before assembly plants shut down and then it quickly ripples to other suppliers at those plants," Fitzgerald said.
Shutting an assembly plant costs automakers tens of millions of dollars a day.
Unions fight for security
Unions are no longer afraid to call for a strike — their strongest weapon — because they are desperate to prove to companies and their own members that they are serious about fighting for job security; automakers and suppliers don’t want to stand down because they are under pressure to reduce costs to stay competitive with foreign and nonunion plants in the southern United States and Mexico, said John Henke, president of Planning Perspectives Inc., a consulting firm in Birmingham that works with suppliers.
"It’s likely we will see more strikes because the union needs to flex its muscles," Henke said. "They need to show they are doing everything they can to protect jobs and benefits."
On the other hand, Henke said, American Axle and other suppliers can’t be successful if they don’t have the same wage rates that peers Delphi Corp. and Dana Corp. achieved while in bankruptcy.
No talks were held between the UAW and American Axle Wednesday, a day after 3,600 workers walked off the job at five factories. The union said it is still waiting to review financial documents necessary to consider the company’s proposal, which includes steep wage and benefit cuts.
Cutting wages as low as $14 an hour, which the UAW agreed to for Delphi during bankruptcy, has changed the competitive dynamic for all suppliers in the industry, Fitzgerald said.
"Competing (suppliers) are going to have to ratify these same types of wage levels in upcoming contracts or they will be uncompetitive," he said.
"That’s going to lead to very difficult negotiations for the union at a number of suppliers in upcoming years."
A strike also is a strong possibility as the CAW begins its negotiations with Detroit’s Big Three automakers. Fitzgerald said walkouts in Canada could last longer than the brief UAW strikes last year against GM and Chrysler.
"When (the CAW) threatens a strike next fall, automakers need to take it seriously," he said. "And the union has already been vocal about not wanting to accept the same givebacks management felt they had to get, and did get, out of the last UAW contracts."
The CAW is seeking to achieve its first collective bargaining agreement at the TRW plant and three other suppliers’ factories, and the pending walkout is viewed as an aggressive action.
"TRW is the tip of the iceberg in Canada," said Aaron Bragman, auto analyst at Global Insight Inc.
Negotiations are tough
The strike at American Axle is reflective of tough negotiations where the company is asking workers to accept the same pay cuts bankrupt companies won — even as it makes money. But a $37 million profit on $3.3 billion in sales last year is a margin more typically associated with grocery stores, not manufacturers, Henke said.
He said the company likely is hesitant to provide more information to the union because it fears setting a precedent of allowing the union deeper access to its financials and risking the exposure of sensitive information.
Unions often must strike — or threaten to strike — to show they exhausted every possible option for preserving wages and jobs, said Harley Shaiken, labor professor at University of California, Berkeley
In recent negotiations, Shaiken said, the UAW was willing to give ground only after seeing hard numbers showing that accepting cuts would save jobs.
Achieving cuts
Making the process more difficult for American Axle is that it is asking current workers to accept cuts — not just to let new hires be paid less.
To achieve that, American Axle likely will have to guarantee future work to the five striking factories and offer cash bonuses to workers for accepting the deal.
The strikes of the past six months, Shaiken said, reflect "a combination of a turbulent environment in the industry and unions clearly drawing the line."
About the strike
American Axle & Manufacturing Holding Inc. and the United Auto Workers did not negotiate Wednesday — the second day of a strike that began when the union’s four-year labor deal expired.
No talks are scheduled.
The union continues to demand financial documents from the company that it says it needs to evaluate American Axle’s proposals — which include a $14 per hour wage cut and benefit reductions.
"No new negotiations, no documents," said Dana Edwards, shop chairman for Local 235, and part of the bargaining team. He said the UAW is pursuing legal options to obtain the information. The UAW filed a complaint with the National Labor Relations Board this week.
American Axle has provided all information the union is entitled to receive, said spokeswoman Renee Rogers. "Our negotiators are at the table, waiting for their union counterparts."
