Lockport Union-Sun & Journal (New York), February 27, 2008, Wednesday

Copyright 2008

Lockport Union-Sun & Journal (New York)

Distributed by McClatchy-Tribune Business News

February 27, 2008, Wednesday

SECTION: BUSINESS AND FINANCIAL NEWS

HEADLINE: Local American Axle workers on strike

BYLINE: Daniel Pye, Lockport Union-Sun & Journal, Lockport, N.Y.

BODY:

Feb. 27--TOWN OF TONAWANDA -- Somber lines of American Axle & Manufacturing workers braved wet, snowy conditions to walk picket lines and show their support for a United Auto Workers unfair labor practices strike of the company Tuesday.

The strike order came down at midnight Tuesday after talks between AAM and the UAW stalled with major issues left unresolved. In a released statement, the union claimed AAM is demanding wage reductions of up to $14 an hour, elimination of future retiree health care and defined benefit pensions for active workers.

"The UAW has a proven record of working with companies to improve their competitive position and secure jobs," UAW President Ron Gettelfinger said in the statement. "But cooperation does not mean capitulation. Our members cannot be expected to make the extreme sacrifices American Axle is asking for with nothing in return."

The union has filed unfair labor practice charges with the National Labor Relations Board alleging that American Axle has disobeyed the rules of collective bargaining by not providing the union with requested information necessary for decision making. In its own statement, AAM said the company's primary objective in the negotiations is to achieve a market-competitive labor cost structure in the United States.

AAM estimates the market standard in the range of $20 to $30 per hour all-in cost, which factors in benefits. Under the prior agreement with the UAW, AAM claimed its all-in labor cost is well in excess of $70 per hour, approximately three times the market rate of peers and competitors.

"It is unfortunate that a market-competitive labor agreement for AAM's original U.S. locations could not be reached," said AAM CEO Richard Dauch. "All of the changes we have proposed have been accepted by the UAW in agreements with our competitors in the United States. I have no idea why AAM is being singled out for a different set of economic conditions."

In terms of pay cuts in the auto industry, the writing has been on the wall for years. But when a company is looking to do business with the UAW, that company needs to take into account the 30 years of struggle workers put in to get and keep their benefits, said Arthur Wheaton, director of labor relations studies at Cornell University.

"What American Axle didn't understand is those concessions aren't given for nothing," Wheaton said. "From what I hear, American Axle is saying, 'Gimme gimme gimme,' without offering much in return. Delphi agreed to have people flow back to GM, and the Big Three (automakers) created the VEBAs (Voluntary Employees Beneficiary Association)."

AAM has been shuffling its production around, eyeing moves to Ohio and Mexico, where it can get tax breaks and incentives. With the company's plans rumored to involve closing the Tonawanda Forge and Cheektowaga machining facility, employees don't have much to lose by striking, Wheaton said.

"The company has very little allegiance to Buffalo and the surrounding area," Wheaton said. "When they're looking at the fact that they have 500 employees here and 3,000 in Detroit, it's easier for them to take those Buffalo plants out and bring those jobs back to Detroit, which is unfortunate."

Both sides said they're looking for a solution, but broken-off talks and unfair labor practice charges don't paint a picture of a quick resolution in the making. Pressure from automakers running low on parts is likely to be the catalyst for resolution, Wheaton said.

Even though the GM Powertrain Plant in the Town of Tonawanda doesn't use parts produced locally by AAM, the effects of the strike will be felt in other GM facilities where light duty trucks are produced as parts are used up. But stockpiles of parts made in anticipation of a strike and softening sales of GM's trucks could draw the strike out, Wheaton said.

"American Axle has to sell the UAW on rising costs and an approach to fix them before they're willing to make a deal," Wheaton said. "But this could be a very bad fight, because even though the UAW knows they'll have to give some concessions, American Axle may not be in a hurry and could let the UAW sweat. This could go on for a while."

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LOAD-DATE: February 28, 2008