UAW-American Axle strike, week 5

The longest automotive strike in a decade turns 1 month old today, leaving American Axle losing millions, striking workers scrimping on $200 weekly strike pay -- and no end in sight. But while both American Axle and the United Auto Workers are suffering, each side says they have much more to lose if they give in. The company and its workers aren't the only ones losing, either: A new report estimates the strike has put as many as 40,000 out of work at related companies and is hampering the U.S. economy.

"Both sides are standing incredibly strong," said John Henke, auto analyst and president of Planning Perspectives Inc. "One side will have to come up with something unique to have a breakthrough."

The strike's issues are emblematic of the auto industry's current state: Executives at American Axle & Manufacturing Holdings Inc. say the company can't stay profitable if it continues to pay workers twice as much as some of its unionized rivals. Workers say they won't accept a 50 percent pay cut from a company that clearly was profitable last year. They say their house payments, children's college education and other bills will be out of reach if wages are cut from $28.15 to $14.50 an hour.

American Axle's largest customer is General Motors Corp., which has 29 plants at least partially shut down. GM is the so-far silent elephant in the negotiating room. High inventories and slow sales of the trucks and SUVs that use American Axle parts are keeping GM on the sideline and off the back of American Axle CEO Richard Dauch, Henke said.

"If GM was hurting, they'd push Dauch to the table," he said.
UAW wants job security

The lack of pressure from GM, combined with high stakes for both parties, has led to this now-historic stalemate. A 52-day walkout at two Flint GM plants in 1998 was the last time a UAW strike lasted more than a month.

Long strikes have become rare, said Mike Smith, director of the Walter Reuther Library at Wayne State University.

Since the late 1970s, the UAW's focus has shifted from gaining benefits and protections to securing jobs, he said. As part of that effort, union negotiators exchanged givebacks on wages for jobs.

The union has consented to wage givebacks, in bankruptcy court, for money-losing suppliers Delphi Corp. and Dana Corp. Last year, the union agreed to allow automakers to pay new hires less.

But the UAW knows that if American Axle wins concessions, other successful suppliers will want the same, Henke said.

"For American Axle, it's not about losing money this month or this year; it's a strategic play to get labor cost in line three to five years from now," he said. "For the workers, they don't want to accept less pay, but if they don't, will they have a job in five years?"

Experts say the UAW will resist wage cuts without offers of bonuses and buyouts to soften the blow to workers, pointing out that just such bonuses were cornerstones of the Delphi and Dana deals.
Strike's effect widens

Workers such as Eric Holland say they have little incentive to cut a deal and get back to work.

He said his daughter, a freshman at Saginaw Valley State University, urged him to go back, so he could help with tuition bills.

"I had to tell her if I accept a $10-an-hour wage cut, I won't be able to help out much more than I can on strike pay," said Holland, a Roseville resident.

While many workers said the strike would be short at the outset, now they have dug in.

"I think it could go at least another month," John Grunwald said. As winds whipped against his picket sign, he added: "We're not willing to go back for nothing."

The company and the union are holding occasional talks, American Axle spokeswoman Renee Rogers said. "We have reached understandings on some key issues. Bargaining is moving ahead, slowly."

After turning a $200 million loss in 2006 into a profit last year, the company risks slipping into the red if the strike is not resolved.

"Depending how long the strike goes on, they will lose revenues that are not likely to be made up, considering the current vehicle market," said Standard & Poor's analyst Robert Schulz. But so far, he said, the impact has been minimal.

Still, the strike's effect has widened beyond American Axle and General Motors.

Global Insight Inc. estimates that as many as 40,000 workers are laid off as a result of the strike, as dozens of suppliers to GM idle their lines. The lost revenue from vehicle sales will result in a 0.3 percent decline in annual U.S. economic output for the first quarter, deepening a projected fall, said Brian Bethun, Global Insight's chief U.S. financial economist.

"Given that economy is not growing much," he said, "it's a pretty significant impact."


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