BL: GM Wins Victories in American Axle Accord, Canada Union Vote
By Alex Ortolani and Jeff Green
May 17 (Bloomberg) -- General Motors Corp., the world's largest automaker, won two victories as a supplier reached an accord to end a strike that choked off parts to more than 30 factories and Canadian workers ratified a cost-saving contract.
The partsmaker, American Axle & Manufacturing Holdings Inc., and the United Auto Workers tentatively agreed on a contract late yesterday that would settle an 11-week walkout. The Canadian Auto Workers union said today its labor deal with GM was ratified with 84 percent of the vote.
The accords should restore the flow of parts from GM's biggest axle supplier and ensure three years of peace with the automaker's Canadian workforce. They also build on the U.S. contracts secured last year by GM, Ford Motor Co. and Chrysler LLC to pare pay and benefits.
``The North American non-competitive labor agreements are now history, which is really a big step,'' said David Cole, chairman of the Center for Automotive Research in Ann Arbor, Michigan.
GM's CAW contract covers about 13,000 workers and follows a pattern set in an accord with Ford two weeks ago, the union said in a statement. The CAW said a GM transmission plant in Windsor, Ontario, would shut in 2010, cutting 1,400 jobs.
The American Axle strike created a parts shortage that idled thousands of workers at Detroit-based GM making pickup trucks, sport-utility vehicles, cars, and engine and vehicle parts. That slowdown in turn hit other GM suppliers such as Lear Corp., the second-largest maker of automotive seats.
`Restart Our Operations'
``We're pleased that the UAW and American Axle have reached the agreement and we hope it gets ratified,'' GM spokesman Dan Flores said. ``With ratification we will move to restart our operations where there is impact.''
American Axle's UAW members in Detroit will be briefed tomorrow, and meetings are being scheduled for employees in New York and at a Michigan plant, the union said in an e-mailed statement. The UAW didn't disclose the terms, and company spokeswoman Renee Rogers declined to give details.
The walkout by 3,650 employees at Detroit-based American Axle began Feb. 26 over proposed pay cuts, stopping almost all production at five of the supplier's plants.
``Our members at American Axle have displayed extraordinary solidarity during this strike,'' UAW President Ron Gettelfinger said in the statement.
GM said this month it would pay as much as $200 million to help end the strike. GM said cutbacks due to the parts shortage reduced output by at least 230,000 vehicles and cut cash flow by about $2.1 billion in the first quarter.
GM Flexibility
Full production at American Axle will give GM the flexibility to deliver its entire product line to dealers quickly, said Aaron Bragman, a Troy, Michigan-based analyst with consulting firm Global Insight.
GM has fallen 15 percent in New York trading since the strike began, while American Axle has dropped 2 percent. GM declined 55 cents yesterday to $20.68 in New York Stock Exchange composite trading. American Axle slipped 2 cents to $22.55.
GM reported first-quarter losses of $800 million from the walkout. The production slowdowns affected factories that employed as many as 42,000 of GM's 91,000 hourly and salaried manufacturing workers in North America.
Canada Contracts
Both GM and Ford now have ratified contracts with their Canadian workers. Chrysler has an agreement pending ratification.
Last week, GM also reached an agreement to end a walkout at an SUV plant in Michigan that made models such as the GMC Acadia, which increased U.S. sales 43 percent this year.
In addition, the automaker ratified a contract at a metal- stamping factory in Ohio. GM is still trying to resolve a local strike at a Fairfax, Kansas, plant that makes Chevrolet Malibu and Saturn Aura cars.
American Axle began negotiating with the UAW last year to cut wage and benefits, slashing employees' hourly payments from $73.48 now to a range of $20 to $30 to compete with rivals such as Dana Corp. The union said recent profits showed that American Axle could afford to pay more.
On May 13, American Axle said the only sticking points in the talks involved health care and supplemental unemployment coverage. The UAW had asked for buyouts of as much as $140,000 for workers who agreed to leave and cash payments of about $100,000 over time to cushion the effect of lower wages, the company said.
Before the agreement was reached, American Axle raised its salary offer and the size of the payments that would go to employees who agree to accept lower wages, the Associated Press reported, citing a person who had been briefed on the talks.
The 81-day walkout was the eighth-longest in U.S. union history, said William LeFevre, an archivist at Wayne State University.
American Axle, which generated about 78 percent of its 2007 revenue from GM, increased production in Mexico during the strike. The company was formed by private-equity investors in 1994 from unprofitable GM plants and went public in 1999.
To contact the reporter on this story: Jeff Green in Southfield, Michigan at jgreen16@bloomberg.net; Alex Ortolani in Southfield, Michigan, at aortolani1bloomberg.net
Last Updated: May 17, 2008 16:32 EDT
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