Axle seeks different terms for specific plants, UAW says
UAW STRIKE AT AMERICAN AXLE
Axle seeks different terms for specific plants, UAW says
Long-term executive incentive plan rejected by shareholders
Automotive News | April 24, 2008 - 12:11 pm EST
DETROIT — The president of a key American Axle & Manufacturing Holdings Inc. union local said today that the company is trying to get different wage and benefit packages for five U.S. plants being struck by the UAW.
That is a critical reason why the union hasn’t settled with the company, said Adrian King, UAW Local 235 president in Detroit. King spoke with Automotive News just prior to the company’s annual shareholders meeting here today.
Separately, American Axle shareholders today voted down a controversial executive incentive plan.
Interviewed at a rally in front of American Axle’s headquarters, King said the union is doing its best to prevent UAW workers at different plants from working under different contracts. “That’s why we’re here — solidarity,” King said.
Some of the American Axle plants on strike make parts for axles, and others make full axle systems.
According to a source involved in negotiations, another key issue in the talks has been wage cuts for existing hourly workers.
Specifically, American Axle wants existing non-production, non-core workers to take pay cuts from about $28 an hour down to $14 an hour. Those wages would mirror the two-tier wages recently negotiated by the Detroit 3 automakers — only for new hires.
The company also wasn’t interested in a UAW proposal for a Voluntary Employee Beneficiary Association to cover health care insurance liabilities for retirees, the source said. The UAW’s contracts with the Detroit 3 includes three massive new VEBA plans to cover those liabilities.
Needs more flexibility
Security around American Axle’s headquarters was beefed up for the annual meeting, which usually attracts a sparse crowd.
Company spokeswoman Renee Rogers said executives never considered moving the meeting in light of a strike at American Axle’s manufacturing complex next to its headquarters.
During a question-and-answer session with shareholders, CEO Richard E. Dauch told shareholders the company has lost hundreds of millions of dollars at its original five U.S. plants in recent years. Those plants must become more competitive and flexible, he said.
He also cited troubles with absenteeism — 20 percent on average — at plants in Detroit and Three Rivers, Mich.
Dauch said if the cost structure of the U.S. plants can become more competitive, American Axle already has the business portfolio and global footprint to compete with any of its rivals. He said American Axle’s all-wheel-drive vehicle products already carry a $1.3 billion business backlog.
Long-term executive incentives
The only controversial proposal of three on the shareholder ballot was for the new long-term executive incentive plan, which has been criticized by the UAW.
Shareholders rejected the plan, but vote results were not immediately available.
Institutional Shareholder Services, an influential shareholder advisory company based in Rockville, Md., recommended that shareholders reject the plan because it didn’t meet the firm’s guidelines for potential dilution of a company’s shares.
Like the plan before it approved in 1999, American Axle’s proposal would have allowed for as many as 5 million company shares to be meted out to executives to attract and reward talent. As many as 500 executives would have been eligible for awards, with no more than 1.5 million shares awarded to any individual in any calendar year.
American Axle stock closed Thursday at $21.83 a share, which in theory would have made those 5 million shares worth $109.15 million had they been set aside today.
In other business, shareholders re-elected three board members, including Dauch, and they re-hired Deloitte & Touche LLP as the company’s outside auditors.
American Axle is weathering a 2-month-old UAW strike by 3,650 workers at five U.S. plants, including its Detroit complex. Parts shortages from the strike have shut or hampered production at 30 General Motors plants. American Axle provides axles and other parts to 80 percent of the light trucks that GM builds in North America.
UAW President Ron Gettelfinger said last week that the sides remain far apart. American Axle counters that it has made several offers to try to bring wages and benefits more in line with those of its competitors, such as Dana Holding Corp. Workers at Dana earn an average of about $14 an hour compared with $28 an hour for the strikers.
American Axle posted 2007 net earnings of $37 million on sales of $3.25 billion.
ENLARGE
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| American Axle CEO Richard E. Dauch says his Michigan plants have an absenteeism rate of 20 percent (file photo). Photo credit: GLENN TRIEST |
