Buffalo News, July 8, 2011, Friday

Buffalo News

July 8, 2011, Friday

Buffalo News

American Axle pressures last local plant to cut costs

Company seeks new concessions to avoid shutdown

By Matt Glynn

American Axle & Manufacturing's Cheektowaga plant, the company's last remaining operation in the Buffalo Niagara region, is facing a threat to its survival.

The Detroit-based auto parts supplier is pushing for more labor cost reductions from the plant's hourly workers. The site has about 100 employees, including more than 60 people represented by the United Auto Workers.

Scott Adams, director of UAW Region 9, calls it "a real serious situation." More talks between the company and the union are expected next week, he said.

The workers' labor contract does not expire until February 2012, but the issue is already at the forefront. The company says it needs a "market-competitive agreement" for the Cheektowaga plant.

American Axle said it was unable to reach a deal with the UAW on just such an agreement for its Detroit plant, and announced it will close that facility when its labor contract expires in February. The company cited reduced demand for light trucks that use its parts, as well as a lack of new work to help cover the facility's operating costs.

Adams said the UAW has shown willingness to be flexible at the Walden Avenue gear-machining plant, to keep the site competitive. But he said American Axle, led by Richard Dauch, its co-founder, chairman and CEO, keeps pressing for more-extensive changes, such as lowering starting pay for workers to $10 an hour from the current $11.50 per hour.

"He's trying to put people in a poverty situation," Adams said.

Adams said the plant's workers have endured tough times in the industry, and are now being asked to accept more concessions. "These are people that are making a great, quality product," he said.

Christopher Son, an American Axle spokesman, said it was "premature" to comment on the Cheektowaga plant's long-range prospects.

"We have a contract agreement in place until Feb. 25, 2012," he said. "We are continuing to have discussions with the UAW International about the viability and sustainability of that facility."

As for the timing of the talks, months ahead of the current deal's expiration, Son said the company has a history of "being proactive in our discussions with the UAW."

The Cheektowaga plant was born when local union and management officials from American Axle's Town of Tonawanda forge persuaded the company to bring "in house" some machining work being handled for the forge by an outside contractor. American Axle poured about $40 million into acquiring and equipping a vacant former Builders Square store. The project was hailed as an innovative approach for adding manufacturing jobs.

The plant, which adopted a lower-cost labor structure, was announced in 1999 and began operating the following year. At the time of the site's debut, American Axle's other two other local plants, in Buffalo and Tonawanda, had a combined 2,800 jobs.

But American Axle's local presence has shrunk dramatically in the past few years. Both the Tonawanda and Buffalo plants were closed.

Art Wheaton, an automotive industry expert at the Cornell University School of Industrial and Labor Relations in Buffalo, said the situation "doesn't look very promising" for the Cheektowaga plant.

"I'm not sure they're going to come to an agreement," he said. "I hope they do."

American Axle has increasingly shifted its production outside the United States, to places such as Mexico. At the same time, Wheaton said, the company has put more pressure on workers at its remaining U.S. operations to accept reduced compensation.

mglynn@buffnews.com