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Strike Could Shut Down GM Car Factories

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[March 28, 2008]  DETROIT (AP) -- The increasingly bitter monthlong strike at auto parts maker American Axle and Manufacturing Holdings Inc. is starting to hit General Motors Corp. where it hurts.

Two GM factories that make cars in Michigan and Ohio soon will be affected by the strike, which already has fully or partially shut down 28 GM plants in the U.S. and Canada due to parts shortages.

GM confirmed Thursday that the strike will force it to idle the Detroit-Hamtramck assembly plant after Friday's lone shift, and a local union president in Lordstown, Ohio, said Thursday that his complex will be shut down on April 4.

Previously the strike had affected only plants that assemble or supply parts for slow-selling pickup trucks and sport utility vehicles.

But GM spokesman Dan Flores said Thursday the Detroit-Hamtramck plant, which makes the Buick Lucerne and Cadillac DTS sedans, is nearing the end of its parts supply from American Axle.

"Employees have been notified that we anticipate we are going to run out of parts sometime late in the shift on Friday, Flores said.

Closing the Lordstown complex, which makes the Chevrolet Cobalt and Pontiac G5 small cars, could hurt GM the most since the cars are selling well due to high gasoline prices.

Through February, the Cobalt, which gets up to 33 miles per gallon of gasoline on the highway, saw sales rise more than 43 percent when compared with the first two months of last year, according to Autodata Corp. G5 sales are up nearly 19 percent.

DTS and Lucerne sales are down nearly 20 percent for the same period.

"Once we go down, it should start affecting the dealers very fast," said Jim Graham, president of UAW Local 1112 at the Lordstown assembly plant near Youngstown.

Graham said GM is running out of a small brake part for the Cobalt and G5 that is made by American Axle. The shutdown likely will affect 3,750 workers at the Lordstown complex and nearby parts suppliers, he said.

"Hopefully they resolve their issues and we get back to work and build cars," Graham said. "We're good at that."

GM workers will get unemployment benefits as well as supplemental pay from the company if the factories are shut down.

Flores wouldn't comment on the status of the Lordstown plant.

Industry analysts and dealers say GM still has an ample supply of pickups and SUVs despite the strike. But the company had only a 53-day supply of Cobalts at the end of February, low by industry standards, according to Ward's AutoInfoBank.

Diane Elnick, industry analyst for the WardsAuto.com Web site, said GM is feeling the impact of the strike now because it is paying wages to workers who aren't producing vehicles.

The company had such a stockpile of trucks and SUVs that the strike didn't affect sales, but if the Lordstown plant is idled, it will come at a time when demand is high for the Cobalt and other small cars.

"Up until now they've had high inventory of these vehicles. Certainly I'm sure if Lordstown goes down, they'll feel it," she said.

About 3,600 UAW workers at five American Axle plants in Michigan and New York walked off their jobs Feb. 26 in a wage and benefit dispute.

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There were signs on Thursday that the strike could last far longer.

Richard Dauch, American Axle's chairman and CEO, warned in a Detroit Free Press report that the company has the ability to move work now done in the U.S. to foreign factories. American Axle has plants in Mexico, Brazil, Europe and Asia.

American Axle spokeswoman Renee Rogers said the company's total U.S. hourly labor cost of $73.48 is three times the rate at its domestic competitors and too high for it to win new business.

"The reality is we don't want to do it," she said of moving work out of the U.S. "We're not going to be forced into bankruptcy in order to reach a market-competitive cost structure. The bottom line is we have to be able to compete in the U.S. That's all we're asking for."

American Axle, formed from parts plants sold by GM in 1994, wants to cut the labor costs to $20 to $30 an hour, which would be similar to competitors and to what will be paid to some new hires under agreements reached between the UAW and the in-house axle-making operations at Ford and Chrysler.

A UAW spokesman in Detroit did not immediately return a call for comment.

Local union officials have said they know cuts will have to be made, but it's unfair for a profitable company to ask workers to take such huge pay reductions. They say workers are paid far less than $73.48 per hour, and that the figure includes retiree health care and other costs that shouldn't be added in.

Although there have been discussions between top bargainers, full negotiating teams for both sides haven't met face to face since March 10.

American Axle makes axles, drive shafts, stabilizer bars and other components for GM, Chrysler LLC and other automakers. GM accounts for about 80 percent of its business. The company posted net income of $37 million last year.

American Axle shares fell $1.41, or 6.3 percent, to $21.03 Thursday. GM shares fell 22 cents, or 1.1 percent, to $19.26.


On the Net:

American Axle and Manufacturing Holdings Inc.: http://www.aam.com/

United Auto Workers: http://www.uaw.org/

General Motors Corp.: http://www.gm.com/

[Associated Press; By TOM KRISHER]

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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