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May 9, 2008

US: GM offers up to $200m to end strike

US analysts have suggested that the 10-week strike at American Axle and Manufacturing could end soon now that General Motors has agreed to spend up to US$200m to help settle the dispute.

US analysts have suggested that the 10-week strike at American Axle and Manufacturing could end soon now that General Motors has agreed to spend up to US$200m to help settle the dispute.

According to the Associated Press (AP), GM said in a regulatory filing on Thursday that it would provide the financial support for temporary payments to supplement reduced wages, and to fund employee buyout and early retirement packages.

The news agency noted that about 3,600 United Auto Workers (UAW) union members at five American Axle factories have been on strike since 26 February in a dispute over the company’s quest for lower wages and benefits. The stoppage has crippled production of GM pickup trucks and sport utility vehicles and caused layoffs at 30 GM factories in the US, Canada and Mexico.

According to the report, no deal had been reached between American Axle and the UAW by Thursday evening but company spokeswoman Renee Rogers told the Associated Press talks were continuing.

“We are hopeful that GM’s financial assistance to help fund the buyouts, retirement incentives and buy-downs … will facilitate an expedited resolution to the international UAW strike,” Rogers said. “It’s been costly and disruptive. A quick return to work will be a win-win-win for everybody.”

American Axle reportedly said in a separate filing with the Securities and Exchange Commission that the aid from GM is contingent on a quick end to the strike.

“We believe the offer will help bridge the gap between American Axle and the UAW and that they will be able to reach a mutually satisfactory agreement in the near future,” GM spokesman Dan Flores told AP.

The news agency said GM’s announcement brought fresh optimism to the picket lines at American Axle’s complex in Detroit.

Harley Shaiken, a professor at the University of California at Berkeley who specialises in labor issues, told AP there were still some tough issues for negotiators to work through, but he believes the investment will resolve the strike sooner than it would have ended without GM’s help.

“It was pretty much understood after a point that GM was going to have to do something. It was not simply an innocent bystander and it was going to be costly,” Shaiken told the news agency. “I think GM’s involvement was a necessary condition for a settlement, but whether the $200 million is a sufficient condition remains to be seen.”

JP Morgan auto analyst Himanshu Patel told the Associated Press he believes GM’s involvement was relatively recent and was motivated by the local strikes, since the company said as recently as 30 April it wasn’t playing a role in the negotiations. Patel said the cash will likely bring the strike to a speedier close.

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