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North American auto production put at risk by UAW's strike at Nexteer

UPDATED: 12/8/15 3:35 pm ET - adds production impacts

A strike by UAW members at Nexteer Automotive’s steering components plant north of Detroit could force major North American production shutdowns if it lasts more than a day or two.

Nexteer workers represented by UAW Local 699 walked off the job today after shooting down a tentative contract on Sunday by on overwhelming 97 percent vote. Local 699 announced the strike at the Saginaw, Mich., plant in a Facebook post early this morning.

Sean McAlinden, chief economist at the Center for Automotive Research, said North American production could stop at up to half of General Motors and Fiat Chrysler facilities should the strike last just “two or three” days.

The company also supplies steering and chassis components to several other automakers such as Ford Motor Co., Toyota Motor Corp. and Volkswagen AG. McAlinden said those parts “don’t store very well and don’t ship very well,” so the automakers do not keep a large inventory, McAlinden said.

Luis Canales, Nexteer director of global corporate affairs, said the company is working with the union to “resolve the issue in a timely manner.”

“Our 1,800+ salaried workforce at the Saginaw facility remains focused on continuing to service our customers,” Canales said in a statement.

Almost unanimous rejection

Workers rejected a tentative deal with the supplier on Sunday by a 3,103-80 margin. Union members on social media who disapproved of the contract cited concerns with health care, wages and other issues.

Local 699 said in a flyer and in a Facebook post Monday evening that its bargaining committee had submitted a new proposal to Nexteer based on the tentative deal’s rejection. It said it would terminate its agreement with Nexteer at 11:59 p.m. Monday night if the company turned down the local’s proposal.

“Over the course of December 7, the parties exchanged proposals but were unable to reach a compromise,” Canales said.

Messages left for union leadership at Local 699, Region 1D and the UAW international were not returned.

Automaker impact

GM said Nexteer makes steering and chassis components for many of its vehicles at several assembly plants across North America.

"At this point our production is not impacted,” GM said in a statement. "We continue to monitor the situation."

Fiat Chrysler said in a statement: "We continue to monitor the status of negotiations between Nexteer and the UAW."

Ford, in an e-mailed statement, said the Saginaw operations do not "directly support" Ford plants in North America, but added: "We are assessing any potential impact through our entire supply chain and will continue to work with our supplier partners to meet customer demand."

The deal would have raised production worker pay to between $15.85 and $17.25 per hour, while starting wages would have risen from $13 per hour to $15.35 over the course of the four-year deal.

'Not a concession environment'

McAlinden said the vote failed in part because the strength of the auto market and the growing economy make it “not a concession environment” like it was in the last round of negotiations in 2010.

“It’s not high wages for that kind of product, and the workers know it,” he said.

He said union leadership likely saw that Nexteer was not willing to move as much as they needed them to in negotiations, leading them to put a contract up for a vote that they knew would fail in order to make a point to the company.

Workers also cited concerns over health care, changes in vacation policy and the loss of three paid holidays as reasons for turning down the deal.

Vandalism reports

In a later Facebook post this morning, Local 699 warned those picketing to not stop vehicles from entering the Saginaw site and to “restrain from vandalizing vehicles.”

“I was just texted asking me to contact the union; plant 3 people STOP damaging vehicles! The media will eat us alive with this negativity and it is only showing our communities we are the aggressors and not the oppressed so please act like adults and keep a cool head,” a Facebook comment by Matt McCollum reads. “Remember, when a person turns to violence they have lost the battle. Solidarity!”

Local police officials could not be reached for comment.

MLive reported this morning that “at least two pedestrians were struck by a vehicle” at the strike site, including at least one who was picketing. Witnesses told MLive that the people were “clipped” by a car but did not need medical attention.

Corporate history

The supplier, ranked 68th on Automotive News’ list of top 100 suppliers with an estimated $2.9 billion of global sales to automakers in fiscal 2014, is based in Saginaw and employs about 12,000 workers worldwide. The company was acquired from GM in 2010 for $450 million by Pacific Century Motors, a Chinese joint venture between Tempo Group of Beijing and an affiliate of the Beijing municipal government.

GM originally owned the business, which later became part of the Delphi Corp. spinoff in 1999. GM reacquired the business during the Great Recession in 2009 to allow Delphi to emerge from four years of Chapter 11 bankruptcy protection.

The UAW's last contract at Nexteer was ratified in 2010.

You can reach John Irwin at jirwin@crain.com -- Follow John on Twitter: @JohnDIrwin

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