Buffalo News (New York), March 2, 2008, Sunday

Copyright 2008 Buffalo News

Buffalo News (New York)

Distributed by McClatchy-Tribune Business News

March 2, 2008, Sunday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: Axle strikers don't have much leverage

BYLINE: Matt Glynn, The Buffalo News, N.Y.

BODY:

Mar. 2--Striking workers at American Axle & Manufacturing face a tough fight as the auto parts maker seeks deep cuts in their wages and benefits.

Slumping U.S. auto sales, wage-reduction deals at other companies and American Axle's growing global presence all affect the bargaining climate for the workers who walked out in the Buffalo area and Michigan last Tuesday.

A quick resolution is not expected. About 3,650 United Auto Workers members are on strike against the parts supplier, including more than 500 from two active plants in the Buffalo area. No new talks are scheduled, and each side said it was waiting for the other to act first.

On the surface, it would seem General Motors Corp. would create pressure for a settlement, since GM accounts for about 80 percent of American Axle's business.

American Axle had stockpiled parts for its customers ahead of the strike. But by Friday, GM had been forced to idle four of its assembly plants, raising questions about whether its stockpile of parts already was running short.

Even so, the weak auto market could reduce any sense of urgency for GM. U.S. vehicle sales have been in a rut, leaving a plentiful supply of the GM trucks and SUVs that use American Axle parts.

GM has an average of 115 days' supply at plants supplied by American Axle, according to data collected by Automotive News. That's almost double the industry practice of keeping a 60-day supply available.

"If [vehicles] were selling, the strike would be settled," said Arthur Wheaton, director of Buffalo labor studies for Cornell University's School of Industrial and Labor Relations.

Striking workers are also feeling pressure on their wages, which the company's chairman and chief executive officer, Richard Dauch, argues are far higher than workers at competitors like Delphi and Dana receive.

According to the UAW, the company wants to cut workers' wages from $28 per hour to $14 per hour. Dauch says the UAW agreed to wage-cutting moves at Dana and Delphi and should do the same at American Axle.

Wheaton said there is a difference in those examples. Both Delphi and Dana filed for bankruptcy, while American Axle turned a profit last year, albeit a relatively slight one of $37 million on $3.2 billion in sales.

And while the UAW agreed to wage-reduction deals with GM, Ford Motor Co. and Chrysler LLC, the lower wages were designated only for new hires in certain jobs, not for existing workers.

American Axle and the UAW are at odds over more than wage and benefit offers, which could prolong the strike. The union claims the company hasn't shared the financial documents it needs to see to evaluate American Axle's situation. The company says it has given the union all the documents it is entitled to. The union has filed a complaint with the National Labor Relations Board over the issue.

The strike has also raised questions about American Axle's plans for its Buffalo-area plants.

American Axle reportedly proposed closing its forge in the Town of Tonawanda and its machining plant in Cheektowaga, along with officially shutting its idled Buffalo plant and closing one facility in Michigan.

Under those circumstances, Wheaton said, it is not surprising the Buffalo- area workers would strike. "If one of the options is closing you down, what do you have to lose?" he asked.

American Axle isn't strictly a U.S. company anymore, compared to when it was founded in 1994. It now has 10,000 employees at 30 facilities worldwide.

And while the company's overall work force is 33 percent larger than at its formation, American Axle has trimmed its U.S. hourly work force by almost half since 2004, after two buyout programs and worker attrition.

Its local work force was cut in half last year after 558 workers at the now-idled East Delavan plant accepted buyouts. American Axle's current area employment is only about a quarter of what it was a decade ago, when 2,400 local workers had jobs at its plants here.

In a conference call with auto analysts a few weeks ago, Dauch praised the company's ever-growing manufacturing plant in Mexico, which he called the center of the company's North American expansion efforts.

Within the next three to five years, Dauch said the company expects its Guanajuato, Mexico, site to become the company's "largest and most diverse manufacturing facility." He also lauded its forging operation in Mexico as "world class," adding: "There is not a better forging operation in the world than our location."

By 2012, the company expects its non-U.S. manufacturing activity to grow to more than 50 percent, as it adds or expands plants in places like Poland, Brazil, China, Thailand and India.

Where does all of this global expansion leave the operations in Tonawanda and Cheektowaga? Wheaton said it is not just the company's growth in places like Mexico that puts the future of the Buffalo-area plants at risk. The company has about six times as many workers at its Michigan plants as it does here. If it decided to consolidate its U.S. operations to reduce costs, Michigan would clearly have the upper hand, he said.

Dauch told a Detroit News columnist last week that American Axle's five core plants, including the three in the Buffalo area, have had "drastic red-ink performance." He cited declining production volumes and the company's inability to hire workers at lower, "second-tier" wages as the reasons.

At the start of the strike, the company stated it would continue to invest in its original U.S. locations if a "market-competitive labor cost structure" was agreed to. Without that, the company warned, its ability to compete for future business or retain business at those locations "is in immediate jeopardy."

Wheaton said the striking workers' best option for pressing their case probably lies in trying to win over public opinion based on how they support the local economy, in everything from tax rolls to car purchases to restaurants.

"It has to be a community response," Wheaton said. "They have to get the entire community involved."

The Associated Press and Bloomberg News contributed to this report.

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LOAD-DATE: March 3, 2008