Friday, February 29, 2008

American Axle Strike Takes Down More GM Truck Plants

By Chris Haak


The strike that the UAW undertook starting Tuesday, February 26 against American Axle and Manufacturing has begun to require certain GM truck plants to close. In spite of American Axle stockpiling parts in the weeks leading up to the strike, yesterday (just two days after the start of the strike), GM closed its Pontiac, Michigan truck assembly plant, which builds Chevrolet Silverado and GMC Sierra pickups. The plant builds about 433 pickups per day and employs around 2,500 workers.

Later today, the Flint truck assembly plant and its 2,100 workers will also be idled as it runs out of American Axle-supplied parts. The Sunday night third shift will be the first one affected by the parts shortage.

American Axle produces almost 80% of the axles used by GM, including parts used on nearly every SUV produced by GM. The company and the union appear to be very far apart, with management seeking wage cuts and employees feeling personally betrayed by the company.

At the moment, GM does not appear to be particularly concerned about the strike. In the short term, GM also somewhat overproduced trucks in January in anticipation of an American Axle-caused shutdown. In fact, GM's overall truck inventory in terms of days' supply jumped from an 83 day supply as of January 1, 2008 to a 113 day supply as of February 1, 2008. Meanwhile, GM's car production - which is mostly front wheel drive and therefore not affected by this strike - kept better pace with demand in January and went from a 57 day supply to a 59 day supply. (The industry generally considers a 60 day supply of unsold vehicles to be ideal). Therefore, a short American Axle strike might actually serve to help GM reduce its inventory of unsold trucks.

Now, should the strike last for a while - which seems entirely possible, given how entrenched the sides are in their negotiating positions - GM could be harmed by the strike, because 58.3% of GM's sales last year were trucks. If the truck supply ran out, GM would suddenly be without more than half of its potential sales.

UPDATE, 12:30 p.m.: In addition to the Pontiac and Flint plants noted above, the Ft. Wayne, Indiana and Oshawa, Ontario truck plants will also be idled this weekend due to strike-related parts shortages.

1 comment:

Jim Bauer said...

Companies love to use the argument that labor costs are too high, pension benefits are a burden to fund, maintain and administer, medical insurance costs are continually on the rise...the list goes on. But workers need these important benefits and a liveable wage in order to support their families. This is what I think many of these CEOs in corporate America are failing to understand; much of this unrest by the workers is due to top executives only recognizing the costs of the bottom tier of their workforce. The guys working on the assembly lines. The CEOs want to make their cuts at the expense of the OTHER employees (yes, CEOs are employees), rather than themselves. The truth is that these guys are millionaires. If you ask me, millionaires do not need pensions. They've made more than enough money to live very comfortably for the rest of their lives. They also can afford to pay for their own private medical insurance. They do not need to have their tax expenses paid for them (like when they get those big bonuses that will have complex and sometimes expensive tax consequences). Again, the list goes on. So why are they (the companies) paying for this stuff, especially in a time when cost appears to be a fundamental reason for denying the union's demands, and frankly the worker's needs? If companies like Axle are truly interested in lowering costs, why not start by looking into the compensation packages and over the top benefits of the guys making all of the decisions? A guy doesn't mind conceding a few things, but I don't think a guy wants to hear anything about rising costs when its coming from a millionaire who will not feel even 1/10th of the pain the worker will feel when his wages and benefits are hacked away at. I applaud the union for their resolve in this fight.