American Axle blames $27M first-quarter loss on UAW strike

Eric Morath / The Detroit News

The United Auto Workers strike against American Axle & Manufacturing Holdings Inc. cost the supplier $132.6 million in first-quarter sales and drove its bottom line into the red, the supplier said today.

The strike at five of its U.S. plants eroded American Axle’s profits by $45.6 million from its first day through the Mar. 31 end of quarter, American Axle said. The strike, which now spans two fiscal periods, is 60 days old.

The Detroit-based components supplier posted a $27 million net loss for its first quarter, compared to a $15.7 million profit in the same period a year ago.

Sales dropped to $587.6 million, from $802.2 million in 2007.

While lower production of trucks and SUVs at key customers General Motors Corp. and Chrysler LLC also contributed to the sales decline, American Axle Chairman and CEO Richard Dauch squarely blamed the strike and the UAW for the loss.

"Without that strike we would have been a profitable company again," he said during a conference call with investors and analysts.

Friday’s report marks the second consecutive quarterly loss for American Axle. The company lost $25.5 million on sales of $755.2 million in the fourth quarter of 2007.

The UAW struck the company Feb. 26, rebuffing American Axle’s demands for severe wage and benefit cuts after the union’s contract expired.

Dauch said the company needs to bring its wages in line with rivals, pointing to similar deals the UAW has made elsewhere.

Talks between American Axle and the UAW are expected to resume shortly.

Dauch said the losses may have been worse if not for the company’s Guanajuato, Mexico, plant, which has taken on more work.

In the first quarter, that plant doubled its daily capacity to 6,000 axles per day, Dauch said. All of the additional volume taken on there was work previously sent to the striking plants. The company spent $3.5 million in the first quarter to redeploy machinery and equipment.

"We have met the priorities of our customers," he said, specifically naming American Axle’s largest customer, General Motors Corp. GM’s "absolutely prioritized where they need work, and Mexico has a great influence in doing that."