Axle Workers Face Harsh Cuts in Tentative Deal
By Jewel Gopwani, Detroit Free Press
May 18–Striking workers at American Axle & Manufacturing will face deep concessions in the UAW’s tentative agreement with the company. But details of the deal show that the union fought to stem the depth of those cuts and soften the impact on workers.
Most wages at American Axle’s Detroit plant would be cut from about $28 an hour to a range of $14.35 to $18.50, depending on the job, said people familiar with talks. Skilled-trades workers would be paid $26, one of the people said.
In the tentative deal, reached late Friday, the UAW saved a plant in New York and secured a $55,000 retirement incentive, along with buyout and buy-down offers that mirror the UAW’s deal with Delphi Corp., according to the people.
Hundreds of American Axle workers in Detroit and Three Rivers are slated to learn more details of the deal at union meetings today and vote early this week.
If ratified, the deal could mark a milestone in the auto industry, allowing what is perhaps the last major supplier to pay automaker assembly wages to cut those costs and become more competitive with rivals that for years have been paying hourly wages in the teens.
The deal allows American Axle to follow in the footsteps of other suppliers once rooted in the automakers — namely Delphi and Visteon Corp. It would join a series of labor deals negotiated in the last year that have made metro Detroit’s automakers and suppliers competitive with their rivals, whether that’s Toyota Motor Corp., Honda Motor Co., or in American Axle’s case, Toledo’s Dana Holding Corp.
"It’s just the start of an entire new era of competitiveness. Or you can look at it another way: It’s the era of no excuses," said David Cole, chairman of the Center for Automotive Research. "They won’t be able to blame labor costs for being noncompetitive."
Just as it was at Delphi, these negotiations have been difficult, and the concessions likely will be painful.
UAW members, getting by since Feb. 26 on $200 in weekly strike pay, have been resisting cuts that would be a jolt to families that built their lives around wages of $28 an hour.
A person familiar with the talks said the union managed to keep the company’s maximum production wage in Detroit from falling to $17 an hour.
During the course of talks, the union raised the buy-down — a payment in exchange for wage cuts — from $90,000 to $105,000, paid out over three years, which also was part of the UAW’s deal with Delphi.
Workers with fewer than 10 years at the company would be eligible for an $85,000 buyout to sever their ties with the company. Workers with 10 or more years at American Axle could receive a $140,000 buyout, paid out at one time.
The deal would include a $5,000 signing bonus.
American Axle’s forging plants in Detroit and Tonawanda are slated to close. But the union was able to keep open American Axle’s plant in Cheektowaga, N.Y., near Buffalo, after the company proposed one week ago to shutter the factory.
The agreement also includes layoff pay. The benefit could be paid for 26 to 42 weeks, depending on a worker’s seniority.
Workers in Three Rivers, about 30 miles outside of Kalamazoo, could face a wage structure that is even lower than what has been negotiated in Detroit, as negotiators fought to keep open the city’s axle and driveshaft factory that employs about 800 people.
Some workers on the picket line early Saturday morning said they hoped to see a contract with a wage structure they can live on, in the face of continuing inflation.
"Everything keeps going up, from a loaf of bread to a gallon of gas," said Dan Melnyk, 36, of Constantine, 9 miles south of Three Rivers.
If ratified, the deal would include $200 million from GM, American Axle’s largest customer, which was forced by the strike to cut production or shut down more than 30 plants. The automaker said the first five weeks of lost production cost it $800 million.
The work not done at American Axle, GM and hundreds of suppliers held down output of the nation’s already stagnant economy in the first quarter and without a quick ramp-up is likely to do the same in the second quarter.
American Axle’s deal came a day after GM and the UAW negotiated a local agreement that ended a monthlong strike at the automaker’s Lansing Delta Township plant, which makes GM’s popular Buick Enclave, GMC Acadia and Saturn Outlook crossovers.
Meanwhile, talks continue this weekend between GM and UAW negotiators representing workers at GM’s Malibu plant in Kansas City, Kan.
Many analysts have speculated that the UAW strikes against assembly plants that make GM’s fastest-selling vehicles were designed to draw the automaker into the dispute. Such actions are not technically legal, however, and UAW leaders have said it was not the case.
But giving concessions to a profitable company was difficult for the union.
"The bargaining committee worked extremely hard to achieve this tentative agreement, and they have voted to recommend it to the membership," UAW President Ron Gettelfinger said in a statement.
Contact JEWEL GOPWANI at 313-223-4550 or jgopwani@freepress.com.
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