DETROIT -- Tower Automotive Inc. is negotiating to avoid a strike authorized last week by workers represented by the UAW and two other unions.
The stakes are high because Tower's frames and suspension modules are not easily replaced, and a strike would quickly hurt North American automakers, particularly General Motors, Ford Motor Co., the Chrysler group and Nissan North America Inc.
"All four have hot models where Tower is an engine cradle or frame producer," says Paul Haelterman, director of market assessment at CSM Worldwide in Farmington Hills, Mich.
Tower filed for Chapter 11 reorganization last February, and a hearing on its request to void its union contracts is scheduled for Feb. 27. If the bankruptcy court says yes, the unions would be ready to strike.
The Tower-UAW dispute has been eclipsed by negotiations between the union and giant Delphi Corp. Both companies have stirred union ire by threatening to cut employee wages and benefits.
Union workers at nine Tower plants in three states voted overwhelmingly Jan. 29 to authorize a strike if Tower voids its contracts.
GM, Ford and Chrysler account for 73.4 percent of Tower's North American sales. Tower has made significant investments to supply key products for each, including the Ford Five Hundred in Chicago and Cadillac sedans in Lansing, Mich., says Merrill Lynch analyst John Murphy.
Tower says its crucial Chicago plant is not part of the group that could have its labor contracts rejected, because it was not included in the Jan. 4 court petition. But nearly 400 rank-and-file workers there still approved a strike vote last week -- a move that increases pressure on Tower.
Murphy says that disruption at either the Chicago or the Lansing plant would have an immediate impact on the earnings of both GM and Ford. Tower's Lansing plant is working without a local contract.
Tower spokeswoman Sharon Wenzl declined to characterize the progress of the talks but said, "We remain committed to negotiations outside the court process."
A shutdown at Tower would reverberate through the entire auto supply chain, causing additional failures of Tier 2 suppliers, Murphy wrote in a report last week.
A strike also could be hard on the union. Tower is investing in low-cost countries. A strike would only accelerate the strategy, says Haelterman.
That gives the UAW less incentive to work with Tower, says a local president who asked not to be identified: "They want to cut our wages and close down some U.S. operations to finance their overseas operations."
You may e-mail Robert Sherefkin at [email protected]