UAW – American Axle deal could signal the end of strike

United Auto Workers, the worker's union at the American Axle plant that has been on strike since March 2008 have reportedly reached an agreement with the GM parts supplier.

The strike has effectively shut down or idled plants across continental North America for General Motors (GM) since April 2008, and an agreement would definitely be welcomed by the auto major. American Axle makes axles, drive shafts and stabiliser bars for large GM sport utility vehicles (SUVs) and pickup trucks.

Renee Rogers, American Axle's spokeswoman confirmed that the warring parties had agreed on a deal, but refused to give details. UAW President Ron Gettelfinger, in a statement on Friday, said that American Axle's bargaining committee had voted to recommend the agreement to members, and that details of the deal would be presented before members in Detroit on Sunday.

In a filing with the US Securities and Exchange commission (SEC), GM said that its money would go for temporary payments to buffer reduced wages for the workers, as well as employee buyout and early retirement packages.

The impact of the strike and the idling GM plants was somewhat watered down by the high gasoline prices and a sluggish economy dampening demand for larger vehicles. Additionally, the strike helped GM cut its inventory of pickups and SUVs.

Work stoppage at American Axle impacted over 30 GM plants, and reduced production by 230,000 vehicles through April 2008. GM has said the strike cost the company $800 million during the first quarter. In the first week of May, GM had said it would contribute $200 million if that helped end the strike, subject to a quick resolution of the dispute.

However, for much of the next week, UAW and American Axle continued to argue about health care costs and supplemental unemployment benefits that are at the core of the strike. Previous discussions have included wage cuts for production workers to a ''more competitive'' rate of $17 an hour, from the existing $28 an hour.

American Axle's competitor Dana Corp recently emerged from bankruptcy after reorganising cost structures, that in part, paid its workers between $14.50 and $16 an hour, and health-care benefits that are managed by a union-led trust fund.

American Axle was spun off by General Motors in 1994. The company says its hourly manufacturing labour cost are now hovering at around $73.48 in wages and benefits, which is three times higher than its US competitors such as the aforementioned Dana Corp.

The company wanted to cut those by $20 to $30 an hour, bringing them in line with other agreements UAW has in place with the in-house axle-making operations at Ford and Chrysler, for its new hires.

However, local union officials argue that workers make way lesser than $73.48 per hour American Axle claims to pay, as its figures are beefed by by retiree health care and other costs that shouldn't be included in computations.