American Axle Rejects New Union Proposal

April 11, 2008
Company stands by threat to move offshore

The six-week-long strike by the United Autoworkers union against American Axle & Manufacturing continues after the company rejected a new contract proposal from the UAW. Though the producer of driveline systems called the new proposal a “slight improvement” over past positions, AAM stated that "if the UAW continues to refuse to make realistic economic proposals, AAM will be forced to consider closing these facilities."

Details of the new UAW proposal were not released. American Axle delivered its own new contract proposal to the UAW on April 12, though the company declined to offer details and the union had no comment on it.

The strike by about 3,600 UAW at five AAM plants in Michigan and New York began February 26. Talks were suspended soon after the strike began, but resumed in late March.

"We have the flexibility to source all of our business to other locations around the world, and we have the right to do so," Dauch said in March. "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." AAM has manufacturing plants in Mexico, Brazil, England, Scotland, Poland, and China. Recently, the group said it would to set up manufacturing in Thailand, and at joint venture in India.

AAM expects any new contract to feature wage cuts, as well as structural changes to its working agreement, comparable to what the UAW has accepted at other domestic automotive manufacturers and suppliers.

The company considers Dana Corp. and the axle-making operations of Ford Motor Co. and Chrysler Corp. to be its domestic competitors. (American Axle was established as a spin-off of General Motors Corp.’s axle-making operations in 1994, and GM continues to be its major customer.)

Specifically, AAM says a “market-competitive labor-cost structure in the United States automotive-supply industry is in the range of $20-$30 per hour all-in cost.” American Axle reports its current “all-in labor cost is well in excess of $70 per hour.”

The UAW contends that American Axle is seeking wage reductions up to $14 per hour and elimination of future retiree and pension benefits, but that it has not justified these positions.

"The UAW has a proven record of working with companies to improve their competitive position and secure jobs," stated UAW president Ron Gettelfinger. "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."