Workers at American Axle have been locked in a bitter labor dispute for nearly three months over management's attempt to slash salaries by 50 percent. This has been a major headache for the parts supplier's biggest client, GM, forcing the automaker to slow production of cars like the Cadillac DTS and Buick Lucerne, and stop building its large SUVs entirely. After trying to stay out of the fray, the General finally decided enough was enough, and offered American Axle $218 million to help end the strike and resume operations. Well it looks like it worked -- company and UAW representatives finally have an agreement, and workers will vote on it this week.
American Axle has been trying to cut costs in order to remain competitive, and the new deal gives them most of what they were looking for. The company will close three manufacturing plants within a year (down from its original goal of five), but the two that have been saved will cut wages to as low as $10 an hour. Under the contract, new hires would now be paid $11.50 per hour for production work, while skilled employees would make $22. Existing workers will see cuts of between $10 and $26 per hour, as well as receive up to $105,000 as a "buydown" to help them transition to the lower pay. Those willing to leave the company entirely are eligible for compensation packages of up to $140,000.
The 3650 American Axle workers represented by the UAW were shown the new contract over the weekend, and their reaction was mild at best. Many were upset that after three long months the parts supplier still made very few concessions, and UAW negotiators were apologetic that they couldn't get a better deal. Some workers expressed a desire to reject it, but UAW President Ron Gettelfinger urged them to vote for approval. Saying that "nobody is proud of what we've presented to you," he stressed that the new agreement was the best they were going to get.
American Axle was founded in 1994 by a group of investors who bought several money-losing manufacturing plants from GM, and the automaker still provides the company with 80 percent of its revenue. Since the strike began on February 26th, GM has suffered parts shortages at 30 factories and been unable to build nearly 230,000 vehicles, costing it around $800 million. Concerned with labor problems of its own, the company is eager to see American Axle up and running again.
If the new labor deal is approved, it will only run through early 2012, meaning things could flare up again in another four years. However as part of the agreement the parts supplier will also invest another $170 to $200 million in its remaining U.S. factories, which will hopefully ensure that the company doesn't just move production offshore the next time it runs into trouble.