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American Axle Ready to Move Offshore

March 28, 2008
CEO insists on market-competitive cost structure
The United Autoworkers union strike against American Axle & Manufacturing Holdings is entering into its second month, but the company’s CEO says the organization will move its production offshore rather than resume operations without a labor contract that is competitive with the market. "We have the flexibility to source all of our business to other locations around the world, and we have the right to do so," American Axle chairman and CEO Richard E. Dauch stated in an interview with the Detroit Free Press. "We will not be forced into bankruptcy in order to reach a market-competitive cost structure in the United States. If we cannot compete for new contracts in the U.S., there will be no work in the original plants." Approximately 3,650 United Autoworkers members have been striking five American Axle plants in Detroit and Three Rivers, MI, and Buffalo, Cheektowaga, and Tonawanda, NY, since February 27. The company’s previous four-year labor contract with the union expired at midnight, February 26. The company maintains that its labor costs top $70/hour, but that its competitors — Chrysler Corp., Dana Corp., and Ford Motor Co. — have labor costs in the range of $20-$30/hour. The UAW maintains that American Axle wants wage and benefit cuts that would bring hourly costs to as low as $14/hour, and has not provided enough justification for its proposals. American Axle supplies axles and driveline components, mostly to General Motors. Its domestic operations are comprised of several onetime GM driveline and forging operations, but it also maintains some domestic metal forming and machining operations. Since being formed in 1994, American Axle has grown its organization overseas, including manufacturing, engineering, and finishing operations in Mexico, Brazil, England, Scotland, Poland, and China. Recently, the group it would to set up a manufacturing operation in Thailand, and at joint venture in India. The strike’s most serious impact has been on GM, which has idled all or parts of 30 plants in the last month due to a lack of components. Other automotive suppliers have been affected as a result of the GM idlings.