Buffalo News (New York), February 27, 2008, Wednesday

Copyright 2008 Buffalo News

Buffalo News (New York)

Distributed by McClatchy-Tribune Business News

February 27, 2008, Wednesday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: Axle strikers feel they have no choice

BYLINE: Matt Glynn and Jonathan Epstein, The Buffalo News, N.Y.

BODY:

Feb. 27--Hourly workers at American Axle & Manufacturing plants spent Tuesday on the picket line, upset about the company's proposal to severely cut their compensation.

The strike began late Monday night, with the expiration of a contract covering 3,650 workers in Michigan and New York. That includes about 500 United Auto Workers members, about 160 of whom are on layoff, at two active American Axle plants in the Town of Tonawanda and Cheektowaga. A plant on East Delavan Avenue in Buffalo was idled late last year and is being maintained with a small staff of 11 workers.

As of Tuesday, American Axle and UAW representatives said no new talks had been scheduled. "The ball's in their court," said Kevin Donovan, assistant director of UAW Region 9. "We're waiting for them to get back to us."

A prolonged strike was thought to pose a risk to automakers such as General Motors, which generates about 78 percent of American Axle's business. American Axle reportedly stockpiled parts in anticipation of a strike, but it is not clear how long that supply would last.

And reports are that GM has an almost four-month supply of trucks and SUVs that use parts from strikebound American Axle plants, due to languishing sales.

"With the way the inventories are running right now, I don't think there is going to be a dramatic run on the vehicles American Axle supplies," said Rebecca Lindland, an automotive analyst with Global Insight Inc. in Lexington, Mass.

On Kenmore Avenue in the Town of Tonawanda, sign-toting workers paced outside the American Axle forge, warming themselves against the blowing snow by burning wood in trash barrels.

"I know they just want to cut [our compensation] in half and take our way of life away," said Rich Prims, 42, an American Axle worker who was dropping off supplies to the pickets.

The North Tonawanda resident, who has a wife and three children, has worked at American Axle for nearly 14 years. He said the region has already suffered a blow from the end of production at the East Delavan Avenue plant. "That's 1,500 people that had families and paid taxes to the state," he said.

He praised the work ethic of his coworkers at the forge. "We come to work every day," he said. "I go in there and everybody's busy."

Another employee, who declined to give his name, summed up the company's contract offer this way: "It's basically unfair. Everything is unfair."

He and other workers referred questions about the strike to the UAW's regional office.

The UAW said American Axle is demanding wage reductions of up to $14 an hour as well as the elimination of future retiree and pension benefits. The UAW said the company failed to provide it with enough information to evaluate its proposals.

American Axle has said its manufacturing workers can make up to more than $70 an hour in wages and benefits, which is on par with assembly workers at GM, Ford Motor Co. and Chrysler LLC.

The company wants to cut that to $20 to $30 an hour, which would be similar to the agreements reached between the UAW and the Detroit Three as well as other auto suppliers such as Dana Corp. and Delphi Corp.

Observers said the striking workers face difficult conditions in light of the company's proposal.

"It hits them in wages," said Patrick Heraty, a professor of business administration at Hilbert College who tracks the industry. "It hits them in medical benefits. And it hits them in their pension plan as well. So the national UAW is getting a lot of pressure from the rank and file."

In addition, a reported company proposal to close both remaining Buffalo-area plants, on top of the Delavan Avenue plant already idled and the wage cut demands, means local workers almost had no choice but to strike, said Arthur Wheaton, director of Buffalo labor studies for Cornell University's School of Industrial and Labor Relations.

"There's really not that much to lose as far as Western New York is concerned," he said.

The UAW's Donovan said American Axle's proposal offered no guarantees on jobs or bringing new business into its facilities.

"I think what's at stake is some respect and dignity for the workers and the opportunity to continue the lifestyles they've led," he said.

No one was predicting how long the strike might last. Strikes against U.S. automakers last year didn't last long. But unlike those negotiations and contracts, which involved concessions for new hires, the American Axle proposal demands big cuts in pay, benefits and pension from existing workers, Heraty noted.

"The workers are being asked to make such significant givebacks that it could well be that they will stay out for a while," he said. "The cuts are so drastic."

Wheaton acknowledged that "it's pretty much unavoidable that there will be a significant drop in wages and benefits." But he said it's not clear what guarantees the workers would get in return.

"What they're looking for is to radically cut the wages and benefits of the people that are working there," he said. "How you can get down there and still have a living wage, I have no idea."

On the other side, from American Axle's point of view, the company realizes it will continue to face tough competitive pressures. Seeking givebacks from its workers is another way for it to position itself by tightening its costs.

"This road just does not get any easier for American Axle," Heraty said. "So American Axle does not want to enter into a contract at this time that's going to commit them to a cost structure that's going to jeopardize their profitability."

By Matt Glynn and Jonathan Epstein. The Associated Press and Bloomberg News contributed to this report.

To see more of The Buffalo News, N.Y., or to subscribe to the newspaper, go to http://www.buffalonews.com. Copyright (c) 2008, The Buffalo News, N.Y. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

LOAD-DATE: February 28, 2008