GM is the wild card in axle war

DETROIT — American Axle is sticking with its demand to cut the wages of its striking UAW workers in half — and why shouldn't it? Standing reluctantly in the wings is General Motors. The former owner of American Axle's operations may have little choice but to broker a deal.

Within a week, GM will run out of American Axle-made parts for its hot-selling Chevrolet Malibu and Pontiac G6 sedans. Then GM will begin to feel real pain from a 2-month-old strike at American Axle that has done little to date except trim some of GM's fat inventories of pickups and SUVs.

"GM has to be concerned about getting a settlement fairly quickly," says auto consultant Craig Fitzgerald, of Plante & Moran PLLC in suburban Detroit. "GM is producing Malibus full-out already. If they lose any production, they probably won't be able to recoup those sales."

That pain might persuade GM to help "buy down" American Axle workers with one-time bonuses in exchange for permanent wage cuts. Or the carmaker might allow many of the 3,650 striking workers to transfer to GM and keep their automaker wages. American Axle was created in 1994 from plants jettisoned by GM.

So far, GM has stayed out of the negotiations. The company line is that the dispute is solely between the UAW and American Axle. GM has been a passive observer, closing or partially shutting down 30 assembly and parts plants as the strike interrupts the supply of axles and other parts. The shutdowns have predominantly affected pickup and SUV plants.

High-stakes poker

But as happened in Delphi Corp.'s bankruptcy, GM is being sucked into a high-stakes poker game between the union and an irreplaceable supplier. And, as with Delphi, GM holds the weakest hand.

On one side of the table is American Axle CEO Richard E. Dauch. His company is sitting on a $344 million pile of cash. Moreover, Dauch continues to operate four U.S. plants, a major plant in Mexico and several factories overseas. So he has the financial resources to hold out for weeks.

Last week, Dauch rejected a UAW proposal that he said fails to address the wage gap between American Axle, which pays workers $28 an hour, and less generous rivals such as Dana Holding Corp.

American Axle is offering $14 an hour. Benefits would be slashed, too.

On the other side is UAW President Ron Gettelfinger, who is personally involved in the negotiations. He knows his strikers never will accept the massive concessions being demanded. So Gettelfinger's troops continue to walk the picket lines and draw $200 a week in strike pay from a strike fund of nearly $900 million.

Last week three GM locals not affected by the American Axle work stoppage threatened to strike GM over local grievances.

Local union officials say the strike warnings relate to local issues and should be taken at face value. But the implication has not been lost on GM executives.

Strategic targets

Indeed, it appears that the UAW, which approves local strikes, has chosen its strike targets carefully to remind GM that it could disrupt key vehicles.

One plant that might shut down is GM's Delta Township assembly plant near Lansing, Mich., which builds the Buick Enclave, GMC Acadia and Saturn Outlook crossovers.

The shadow of GM's bailout of Delphi looms over the American Axle dispute.

The automaker has spent more than $7.5 billion to restructure its former parts division, Delphi.

GM is helping Delphi buy out more than 20,000 UAW members, and it may have to spend billions more to help the supplier emerge from Chapter 11 reorganization.

At Delphi, GM was legally obligated to help with worker cutbacks. It has no such obligation at American Axle.

But from a practical standpoint, GM may have no choice. Shortly before American Axle workers struck on Feb. 26, the supplier's executives asked GM to allow 2,000 of its workers to transfer to GM, said a source familiar with the talks.

The offer fizzled when GM asked whether price cuts or other considerations would be offered in return.

Within a week, GM will learn the price for noninvolvement. That's when the carmaker runs out of an American Axle-made knuckle used in rear suspensions on the Malibu and G6. Dealers have slim 40-day inventories of those vehicles.

And that's when the UAW and American Axle will find out exactly how much pain GM can tolerate.

You can reach David Barkholz at

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