GM to pay up to $200M to help end American Axle strike

A bitter, 10-week strike at auto parts supplier American Axle and Manufacturing Holdings Inc. could end soon now that General Motors Corp. has agreed to kick in up to $200 million to help settle the dispute, industry analysts said.

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

About 3,600 United Auto Workers at five American Axle factories have been on strike since Feb. 26 in a dispute over the company's quest for lower wages and benefits. The work stoppage has crippled production of GM pickup trucks and sport utility vehicles and caused layoffs at 30 GM factories in the U.S., Canada and Mexico. GM is American Axle's former parent and largest customer.

No deal had been reached between American Axle and the UAW as of Thursday evening, but company spokeswoman Renee Rogers said 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 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 said.

GM's announcement brought fresh optimism to the picket lines at American Axle's complex in Detroit.

"GM has to realize they've got a vested interest in this company doing well," said Bill Alford, president-elect of UAW Local 235, one of the striking locals. Alford said he had not heard from the union's bargaining team since GM made its announcement.

A phone message seeking comment was left for UAW spokesman Roger Kerson.

Worker Doug Sherrill, 44, of Macomb County's Macomb Township, said he is optimistic the strike will end, but he still was skeptical after spending 10 weeks on the picket line.

"We've heard things before and nothing's ever panned out," he said. "I really hope that they would use that money to their advantage for all three of them and end this thing."

Harley Shaiken, a professor at the University of California at Berkeley who specializes in labor issues, said there are 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 said. "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."

Shaiken pointed out that $200 million would work out to about $14,000 per employee over the life of a four-year contract.

American Axle makes axles, drive shafts and stabilizer bars mainly for GM's large sport utility vehicles and pickup trucks. The supplier, which formed from parts plants GM sold in 1994, has said its hourly labor costs are far greater than those at competitors who have reached agreements with the UAW, and it needs to lower its costs to gain new business. The company has threatened to move work done at its U.S. plants to foreign factories.

GM said in its filing that the strike has not hurt its ability to deliver trucks and SUVs because its dealers had large inventories of the vehicles. But its North American division lost $800 million due to the strike, and through April, the strike cost GM production of about 230,000 vehicles.

"We anticipate that this lost production will not be fully recovered after this work stoppage is resolved, due to the current economic environment in the United States and to the market shift away from the types of vehicles that have been most strongly affected by the action at American Axle," the automaker said.

GM also said the strike has cut its liquidity by $2.1 billion, but it said it has the money to meet its needs even if U.S. industrywide auto sales continue to drop.

The UAW also has gone on strike at two key GM factories and threatened strikes at several others in disputes over local contract issues. Local plants negotiate their own operating agreements separate from the national contract, which was settled last year.

Workers at a factory near Lansing, Mich., that makes GM's strong-selling crossovers - the Buick Enclave, Saturn Outlook and GMC Acadia - have been on strike since April 17. A UAW local at another plant in Kansas City, Kan., that makes the hot-selling Chevrolet Malibu midsize sedan has been on strike since Monday. Talks continue at both factories.

Auto industry analysts have said UAW struck the plants to pressure GM into getting involved in the American Axle dispute, although union officials have denied any connection. Both plants make vehicles that are selling well for GM even in a slumping U.S. auto market.

Himanshu Patel, an auto analyst with J.P. Morgan Securities Inc., said he believes GM's involvement was relatively recent and was motivated by the local strikes, since the company said as recently as April 30 that it wasn't playing a role in the negotiations. Patel said the cash will likely bring the strike to a speedier close.

Shortly before GM's government filing, a UAW local at a transmission plant in Warren that had threatened to go on strike reached a tentative agreement with GM. Local 909 had threatened to strike on April 18 but decided to stay on the job as negotiations continued.

Local 909 President Al Benchich said no date has been set for a vote on the deal, which he said covers seniority rights, work rules and transfers between jobs.

"I feel pretty good, given the economic climate and the general direction of things," Benchich said Thursday. "I think we protected our members' interests."

GM shares fell 25 cents, or 1.2 percent, to $21.15 Thursday, while American Axle shares rose 44 cents, or 2.1 percent, to $21.80.

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AP Auto Writer Dee-Ann Durbin contributed to this report.

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On the Net:

General Motors Corp.: http://www.gm.com

United Auto Workers: http://www.uaw.org

American Axle and Manufacturing Holdings Inc.: http://www.aam.com