United Auto Workers members at American Axle and Manufacturing Holdings plants went on strike early on Tuesday (26 February) after the supplier failed to reach a new contract agreement with the union.
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American Axle spokeswoman Renee Rogers told the Associated Press (AP) workers were striking after a Monday midnight deadline passed without a new contract agreement.
American Axle has 3,600 workers at five US plants in Michigan and New York, the report said.
Rogers was quoted as saying talks between Detroit-based American Axle and the UAW had broken off for the night and didn’t know when they would resume.
The strike could be damaging to General Motors, American Axle’s former parent, AP noted, as the automaker accounts for nearly 80% of American Axle’s business.
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By GlobalDataAnticipating a strike, the supplier had been stockpiling parts.
The UAW told AP that American Axle was demanding wage reductions of up to $US14 an hour as well as elimination of future retiree and pension benefits. The UAW also said the company failed to provide the union with enough information to evaluate its proposals.
“The UAW has a proven record of working with companies to improve their competitive position and secure jobs,” UAW President Ron Gettelfinger said in a statement cited by the news agency. “But cooperation does not mean capitulation. Our members cannot be expected to make the extreme sacrifices American Axle is asking for with nothing in return.”
American Axle chairman and chief executive Richard Dauch reportedly said the union should give the company the same wage concessions it has agreed to at other suppliers and automakers.
“All of the changes we have proposed have been accepted by the UAW in agreements with our competitors in the United States. I have no idea why AAM is being singled out for a different set of economic conditions,” Dauch said in a statement cited by the Associated Press.
The Associated Press said UAW’s recent contracts with the ‘Detroit Three’ automakers, which established lower wages for thousands of non-assembly workers, set the stage for tough negotiations at some of their suppliers.
American Axle’s manufacturing workers can make up to $65 an hour in wages and benefits, which is about the same as assembly workers at GM, Ford and Chrysler but the supplier wants to cut that to $20 to $30 an hour, which would be similar to the agreements reached between the UAW and non-assembly workers at the Detroit Three as well as other suppliers such as Dana and Delphi.
According to the Associated Press, the UAW agreed to lower the wages for starting workers at American Axle after a one-day strike in 2004 but Rogers said the supplier had hired so few new workers since 2004 that it has seen little advantage.
JP Morgan Securities analyst Himanshu Patel told AP the UAW’s previous agreements would make it hard for the union to argue that American Axle workers should have higher wages.
“The UAW’s decision to classify all of the hourly workers at Ford’s and Chrysler’s in-house axle plants as ‘noncore’ is a major precedent indicating that the UAW leadership philosophically agrees that the manufacturing of axles is not a $60-$70 per hour job,” Patel said in a note to investors cited by the news agency.
