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American Axle Strike: 30th GM Plant to Idle Today
31 Mar 08
The month-long strike at American Axle is set to affect General Motors’ 30th plant, as the supplier increases its attempts to limit the impact of the action by rehiring laid-off workers and advertising for ”help wanted”.
Global Insight Perspective | | Significance | GM will close its Detroit-Hamtramck plant today as the prolonged strike at American Axle now begins to have an impact on its car-making facilities. | Implications | The models built at the affected plant, the Cadillac DTS and Buick Lucerne, are not big sellers for GM and so the closure will not have an immediate impact. | Outlook | With GM's turnaround still far from complete, and in light of the wider economic issues faced by the contracting market and marked segmentation shifts, this strike action has the potential to inflict lasting damage. |
General Motors (GM) will idle production at its Detroit-Hamtramck plant today, making it the 30th GM facility to have been affected by the month-long American Axle strike, according to Dow Jones Newswires. The Hamtramck plant makes the Buick Lucerne and Cadillac DTS sedans and is GM's first car-making facility to be affected by the strike action. GM's Lordstown, Ohio plant, which makes the Pontiac G5 sedan, is also under threat of closure this week (see United States: 27 March 2008: American Axle Strike Threatens to Idle First GM Car Plant). GM notified some 1,850 hourly workers at its Detroit-Hamtramck plant on Thursday (27 March) that all production, except some maintenance work, would cease today, according to company spokesperson Dan Flores. Up until now, those GM plants affected by the prolonged dispute had largely built the company’s range of big pick-up trucks and sport utility vehicles (SUVs), and since GM has a large inventory of these vehicles it was not overly concerned by the closures as they would not affect sales in the short term. Separately, American Axle has initiated a number of measures to try and limit the damage caused by the strike, advertising in Sunday newspapers for potential replacement workers and sending letters inviting back workers laid off prior to the industrial action. Advertisements asking for workers to replace anticipated job losses published in the local press in Pontiac, Buffalo, and Three Rivers, near American Axle facilities, angered the United Auto Workers (UAW) union, which in response has called for a mass picket outside American Axle's Detroit headquarters today. In addition, American Axle has written to workers who were laid off prior to the strike asking them to return to work. Spokesperson Renee Rogers said that the letters have been sent to employees represented by the union, which is on strike. Laid-off workers could lose benefits if they do not return to work. Outlook and Implications As the American Axle strike drags on, and as GM is forced to halt more production, now also affecting its passenger car models, the potential for lasting damage to GM's finances and its ongoing turnaround strategy increases (see United States: 26 March 2008: American Axle Strike Costing GM Billions of Dollars in Lost Production—Report). The halting of production of the DTS and Lucerne is not of immediate concern to GM, as it has some inventory of the vehicles and they are not high-volume models anyway, but the same cannot be said of the Pontiac G5 made at Lordstown, which has a short inventory and is selling well. Meanwhile, American Axle’s attempts to limit the damage are becoming increasingly desperate and its tactics will only serve to increase the strain on its relationship with the UAW, which shows no sign of giving in. Although top-level negotiators have been continuing discussions, the two parties’ full negotiating teams have not met since 10 March and no new information regarding progress in the talks has been made public.
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