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American Axle and Manufacturing Holdings will cut its US hourly work force by 2,000, or about 55%, as a result of a new contract ratified last week by the United Auto Workers union.

The auto parts maker said its total hourly labour costs would drop from US$73.48 before the new contract to between $30 and $45, the Associated Press (AP) reported, adding that the cost would vary by factory because they have different wage rates.

The news agency noted that the contract agreement came after a nearly three-month strike against the company by 3,650 US workers that crippled General Motors’ production of pickup trucks and big sport utility vehicles.

American Axle began bringing its factories back on line this week, the report said.

Chief financial officer Mike Simonte told the news agency the strike would cost the company $125m to $130m in lost profits this year though it expects to save $300m per year with the lower labour costs.

The company also said most of the job cuts would come through buyout and early retirement offers, although there would be some involuntary layoffs.

The buyouts and layoffs had been expected by workers and unions. During the strike, AAM had actively recruited new workers at its new wage rates, in expectation that existing workers facing substantial cuts would accept severance deals when offered after the dispute ended.

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By GlobalData