American Axle UAW Workers Approve Contract and End Strike

Bitter strike comes to an end

By Chris Haak

05.23.2008

Late last night, the UAW announced that the striking rank-and-file workers at American Axle voted to approve their concessionary contract by a 78% to 22% margin.

The American Axle strike was an ugly situation for all parties involved. GM lost $800 million as a direct result of the strike during March alone, due to the closure or partial closure of as many as 30 different assembly plants. GM also had to chip in another $218 million to help bridge the gap between the UAW and American Axle. The 3,650 UAW workers who were on strike at five American Axle facilities had to survive on very low strike pay for three months, and now are going back to work in the same jobs they had before, but in some cases at two-thirds of their previous hourly wage. The UAW, although managing to improve the final deal by several dollars per hour over American Axle’s initial offer, appears to have overall “lost” this battle with management, showing that the union’s power has been eroded further.

Related to the strike’s settlement was the dramatic drop in pickup and SUV demand – which we outlined in our previous two articles about trends that Ford’s management also noticed. GM announced a few weeks ago that it would significantly curtail production of trucks this year. The drop in large truck demand meant a drop in the demand for axles underpinning these trucks, which meant that American Axle needed its workers to come back to work even less in May than it did when the strike began in February.

For its part, the UAW’s leadership was well aware that they were putting a contract offer that wasn’t as good as they had hoped in front of the membership for a vote. “Our members have had to make some tough decisions for themselves and their families and have done so with careful deliberation,” said UAW President Ron Gettelfinger.

The company will pay workers up to $105,000 over the next three years to make the transition to a lower hourly wage lower. Workers will also be offered between $55,000 and $140,000 incentives to either retire early or leave the company without retiring in an effort to reduce headcount and transition more of the company’s manufacturing capacity to facilities outside the US, including Mexico and Asia. American Axle actually turned a modest profit last year, but saw that their competitors who were more financially distressed had been able to wring lower wages out of their union membership, so were in an uncompetitive position. At least the new deal should help the company remain competitive with other US suppliers going forward.

If it sounds like US-based suppliers and automobile manufacturers can’t seem to catch a break, that’s probably right. Even before the economy turned south in recent months, decades of poor management in the industry led to huge losses even during a rosy economy. Hopefully in a poor economy, the management decisions made in this industry will be better ones. More likely, however, we’ll see further struggles and labor battles before things turn around again.

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Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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2 Comments

  1. The union got the shaft. Workers have no rights anymore, the greedy corporations hold all the cards.

  2. And six months later, the car companies and Ron Gettlefinger are begging the taxpayers for more money. Who ever said that blackmail doesn’t pay.

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