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April 17, 2008 |
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AMERICAN AXLE: Mexico Axle Plant Supplies Auto Parts to GM General Motors Corp. is reopening two assembly factories within April with axles supplied by American Axle & Manufacturing Holdings Inc.'s plant in Guanajuato, Mexico, according to David Barkholz and Robert Sherefkin of Crain News Service citing Automotive News sources. GM continued manufacturing Chevrolet Silverados and GMC Sierras in its plant in Fort Wayne, Indiana, last week, and plans to resume pickup production in a plant in Oshawa, Ontario, on April 21, 2008. As reported in the Troubled Company Reporter on April 14, 2008, the strike called by the United Auto Workers union at Axle's original U.S. locations continues into its 47th day. Approximately 3,650 associates are represented by the UAW at five facilities in Michigan and New York. With the objective of reaching a compromise agreement, Axle requested the Federal Mediator assigned by the Federal Mediation & Conciliation Service to assist in the company's ongoing negotiations with the UAW. Axle had hoped that the involvement of an impartial third party at the bargaining table could assist both sides. The UAW refused to allow the Federal Mediator to help the parties reach agreement. Axle was disappointed in the UAW's decision. "While the UAW had conversations with a representative of the Federal Mediation and Conciliation Service, it was concluded that a mediator could add little to the process at this juncture; in fact, it would place the mediator in a no-win situation," UAW President Ron Gettelfinger said. "Throughout these negotiations, the UAW has repeatedly offered responsible proposals and counter-proposals to Axle in an attempt to bring a conclusion to bargaining." As reported in the Troubled Company Reporter on April 11, 2008, negotiators representing AAM and the UAW met at the bargaining table for the first time in over three weeks on April 9, 2008. At this meeting, the UAW presented a new economic proposal to Axle. Although it was a slight improvement from the UAW's previous bargaining positions, the all-in labor cost proposed by the UAW is still approximately 200% of the market rate of Axle's competitors in the United States automotive supply industry. Axle expressed disappointment over the UAW's failure to make proposals that address the competitive reality Axle and its UAW- represented associates jointly face in the U.S. driveline marketplace. Axle needs a structural change in labor costs at its original U.S. locations that is comparable to the agreements the UAW has previously made with Axle's competitors in the United States automotive supply industry. If the UAW continues to refuse to make realistic economic proposals, Axle will be forced to consider closing these facilities. Axle has no desire to close the original U.S. locations. Axle's preferred approach is to reach an agreement with the UAW on a new U.S. market competitive labor cost structure for these facilities. If such a market competitive agreement is accomplished, these facilities will be able to bid competitively for new business and Axle will be able to continue investing in these operations. Axle has offered generous buy-outs for associates who do not wish to continue to work for Axle subject to a competitive wage and benefits package. Axle has also offered to make annual buy- down cash payments to associates who accept a competitive wage and benefits package. Axle's proposed buy-outs and buy-downs will provide its associates and families a financial cushion and soft landing during the transition to a new U.S. market competitive labor cost structure. These proposals are similar to those that have been successfully used by Chrysler, Ford, GM and Delphi in recent agreements with the UAW. Negotiations are continuing. Axle remains hopeful that the International UAW will soon put forward economic and operating proposals that will allow Axle to compete on a level playing field with its competitors in the United States automotive supply industry and maintain its manufacturing operations in the original U.S. locations. GM has about 30 facilities affected by the strike at Axle as the supplier attempts to negotiate with the union. Chrysler LLC is temporarily closing its vehicle assembly facility in Newark, Delaware as the strike among UAW union members at AAM stretches. AAM supplies Chrysler components for the Dodge Durango and Chrysler Aspen sport utility vehicles in Newark and two versions of the Dodge Ram pickup made in Saltillo, Mexico. About GM Headquartered in Detroit, Michigan, General Motors Corp. (NYSE: GM) -- http://www.gm.com/ -- was founded in 1908. GM employs about 266,000 people around the world and manufactures cars and trucks in 35 countries. In 2007, nearly 9.37 million GM cars and trucks were sold globally under the following brands: Buick, Cadillac, Chevrolet, GMC, GM Daewoo, Holden, HUMMER, Opel, Pontiac, Saab, Saturn, Vauxhall and Wuling. GM's OnStar subsidiary is the industry leader in vehicle safety, security and information services. About Axle Headquartered in Detroit, Michigan, American Axle & Manufacturing Holdings Inc. (NYSE:AXL) -- http://www.aam.com/ -- and its wholly owned subsidiary, American Axle & Manufacturing, Inc., manufactures, engineers, designs and validates driveline and drivetrain systems and related components and modules, chassis systems and metal-formed products for light trucks, sport utility vehicles and passenger cars. In addition to locations in the United States (in Michigan, New York and Ohio), the company also has offices or facilities in Brazil, China, Germany, India, Japan, Luxembourg, Mexico, Poland, South Korea and the United Kingdom. * * * As reported in the Troubled Company Reporter-Latin America on April 7, 2008, Moody's Investors Service placed American Axle & Manufacturing Holdings, Inc.'s Ba3 Corporate Family Rating under review for downgrade. In a related action, American Axle's Speculative Grade Liquidity Rating was lowered to SGL-2 from SGL-1. The review will consider the potential near term implications of the protracted work stoppage by American Axle's UAW employees on the company's financial metrics and liquidity, balanced against the potential long term benefits of any eventual settlement. |
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