UAW STRIKE AT AMERICAN AXLE

Dick Dauch's labor journey: Hero to demon

Richard E. Dauch: The American Axle strike has cost him in production and reputation with his work force.
DETROIT — Those who know Richard E. Dauch aren't surprised that the CEO of American Axle & Manufacturing Holdings Inc. has dug in his heels against striking UAW workers.

Dauch, 65, has put aside his reflexive empathy for labor to demand wage and benefit concessions that he believes are critical to the future of the company, says longtime friend Dave Cole.

"I know he didn't want to do this, but he felt he had no other option to try and get his labor costs competitive with the market," says Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

Dauch's hard-line negotiating stance has destroyed his longtime reputation as a friend of the worker. Today he is widely seen as anti-union in a region where union loyalties run deep.

Richard E. Dauch
Title: CEO, American Axle & Manufacturing Holdings Inc.
Age: 65
Education: B.S., Industrial Management, 1964, Purdue University
Previous employers: GM, Volkswagen, Chrysler
Family stake in American Axle: 17.4%, worth $196 million
Total compensation since 1997: $257 millioncq with story
Source: American Axle & Manufacturing Holdings; UAW

Beating the rep

Dauch's reputation has taken a beating since 3,650 UAW members struck five American Axle plants Feb. 26. The strike has stopped or hamstrung production at 30 factories of American Axle's dominant customer, General Motors.

Some of the damage was self-inflicted. Two weeks into the strike, Dauch went vacationing in Florida while workers in Detroit and Buffalo, N.Y., picketed in the snow.

In a speech last week, UAW President Ron Gettelfinger also criticized the at least $258 million in total compensation that Dauch has drawn from American Axle since 1997.

He earned $10.2 million in 2007 alone, Gettelfinger said, while preparing to ask American Axle's rank and file to accept a contract that would slash their wages and benefits in half.

Dauch, in interviews with Detroit newspaper columnists, has raised the specter of moving jobs to Mexico if American Axle can't get wages in line with its competitors. At rival Dana Holding Corp., the UAW agreed to lower its members' wages to an average of $14 an hour under the auspices of bankruptcy protection. That is half what American Axle was paying its UAW-represented workers before they went on strike.

American Axle also has advertised for new workers. The supplier says it wants to begin screening candidates to replace employees who take buyouts. But to strikers, the ads screamed "Scabs."

Glory days

Dauch is accustomed to more favorable publicity. The former Purdue University fullback has been viewed for the better part of 15 years as a revered elder statesman of the auto industry.

In 1994, he and former Chevrolet executive James McLernon took five of GM's cast-off, money-losing axle operations and built American Axle into a successful driveline maker. It posted 2007 net earnings of $37 million on sales of $3.25 billion.

Dauch became a local workingman's folk hero. He invested $3 billion mostly in upgrading American Axle's U.S. operations. He rejuvenated a run-down Detroit neighborhood by building American Axle's headquarters there. And he endeared himself to workers, arm-wrestling them on the assembly line and remembering many of them, and their children, by name.

Most important, he paid wages and benefits equivalent to those at larger auto companies.

Salty

But there's a less flattering side, says Wendy Thompson, a retired ex-president of UAW Local 235. The local represents workers at American Axle's main axle complex in Detroit.

Dauch privately can be autocratic, vindictive and prone to using salty language on the factory floor to dress down supervisors in front of their hourly counterparts, Thompson says. "One supervisor's hands began shaking when he found out Dick was in the plant."

For a long time, rank-and-file workers enjoyed Dauch's giving managers such rough treatment, in effect holding them to the same demanding standards as laborers, she says. They responded by working hard for American Axle. It showed in stellar quality and delivery records, confirms Bo Andersson, GM's group vice president for purchasing and supply chain. But now those workers find themselves on the other side of the line of scrimmage from a determined Dauch.

The UAW says American Axle has kept the union partially in the dark during most of the negotiations. It took more than five weeks into the strike for American Axle to provide financial information that the UAW says it was legally entitled to at the outset of talks. American Axle denies it has withheld data.

Hard line

Dauch has taken a hard line before. He doesn't like booze around his plants. In 1996, he quietly bought nearly a half dozen bars and liquor stores around his Detroit plants, then bulldozed them. He cited the negative impact of alcohol on industrial safety.

American Axle's honeymoon with labor began to change by 2004, Thompson says. That's when Dauch insisted on getting approval to pay new hires a lower wage than current workers, after the UAW made that concession to money-losing Delphi Corp.

American Axle workers were incensed, she says. The company was highly profitable. In 2003, Dauch was the highest paid auto industry executive, with salary and bonus, including exercised options, of $30.1 million.

An earlier Dauch-UAW confrontation was a precursor to the current strike. It flared at the Buffalo Gear, Axle & Linkage plant in Buffalo, N.Y.

Workers there expected to build axles for the next-generation 2009 Chevrolet Camaro muscle car. But after the union local declined to agree to contract concessions, Buffalo employees were told in September 2006 that Camaro axles would be built elsewhere. A little more than a year later, American Axle idled its Buffalo plant.

The company hasn't said where the Camaro's axles will be built. The UAW suspects the work will go to an American Axle plant in Mexico. If so, American Axle must ship the axles almost 2,000 miles to Oshawa, Ontario, where the Camaro is assembled. The trip from Buffalo would have been 120 miles.

The UAW is on notice: Former hero Dauch will go the distance to get what he wants.

You can reach David Barkholz at dbarkholz@crain.com

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