UAW urges adoption of Axle deal to angry workers

DETROIT (Reuters) -- UAW officials on Sunday urged American Axle & Manufacturing Holdings Inc. workers to ratify a contract that would cut wages by almost 40 percent, shutter three plants and end a three-month-old strike with a subsidy of $218 million from General Motors.

Some 3,650 UAW-represented workers, including almost 1,900 in Detroit, will vote this week on a four-year contract that would cut hourly pay to between $10 and $26 and offer payments of up to $105,000 over three years for workers who remain.

American Axle, which relies on GM for almost 80 percent of its revenue, would also provide buyouts of up to $140,000 for workers who leave the payroll.

A vote to approve the cost-cutting deal would mark a win for American Axle, which would get many of the concessions it has said it needs, and for GM, where an end to the strike would remove a major uncertainty for investors.

An end to the American Axle strike would cap a series of deals by GM and key affiliates, including former subsidiary Delphi Corp., to cut or cap labor costs in the United States and Canada.

Detroit-based American Axle says it needs steep wage cuts to remain competitive with other suppliers, including Dana Holding Corp., which have come through bankruptcy with sharply lower labor costs.

At a stormy meeting in Detroit on Sunday, UAW officials made a grudging case for the proposed American Axle deal -- revealing details of the proposed contract to hundreds of angry and disgruntled workers who must now decide whether to approve it.

"It's really a lose-lose situation," said Kevin Haggerty, a worker who has been with American Axle since 1994, when investors led by CEO Richard E. Dauch formed it by buying money-losing factories from GM. "I don't like it, but it's the best we can do right now."

UAW President Ron Gettelfinger told American Axle workers he understood their frustration with the contract the union's leadership was urging them to approve but also stressed that a better deal could not be reached.

"Nobody (on the bargaining team) is proud of what we've presented to you," Gettelfinger told workers who had assembled at a Detroit high school, according to a person who attended the meeting.

Some UAW workers interrupted with shouts of "Vote it down!" while others left expressing frustration that American Axle had only moved slightly from its bargaining position when the strike began in February.

"Your fight is not with the people up here," Gettelfinger told the workers, according to a witness. Guards prevented reporters from attending the gathering.

TALLYING THE PAIN

A contract summary distributed by the UAW showed the union had succeeded in pushing back some of American Axle's more drastic proposals but had accepted sharply lower wages and other key concessions.

American Axle would close a forging plant in Detroit within six months and a second forging operation in Tonawanda, N.Y., within a year. Those plants employ over 700 workers. A now-idled plant in Buffalo, N.Y., would close immediately.

The UAW succeeded in getting the company to reverse a plan to close plants in Cheektowaga, N.Y., and Three Rivers, Mich., in exchange for wages as low as $10 per hour.

New hires under the contract would start at $11.50 for production workers and $22 for skilled workers. Workers would get a one-time signing bonus of $5,000, and those that remain would get "buydowns" to compensate for the first three years of lost wages.

GM had offered $200 million to fund the buyouts at American Axle and had said the strike cost it $800 million in the first quarter, with lost production of 230,000 vehicles through April.

Late Friday, GM broke a deadlock in contract talks by adding $18 million to pay for supplemental unemployment benefits for American Axle workers, a UAW official said.

But GM's lowered production forecast for trucks like the Chevrolet Silverado means American Axle workers would face layoffs even if the contract were ratified because of lower demand for axles and related components.

"With GM cutting back on their production, it's known that when GM catches a cold we catch the flu or pneumonia," said UAW Local 235 President Adrian King, who represents Detroit workers who will vote Thursday on the contract.

"Right now, we're on strike. We're in limbo. Are we fighting a good fight? Are we fighting for something? That's the question our membership has," said King.

The UAW went on strike on Feb. 26, at five American Axle plants in Michigan and New York, triggering parts shortages that shut down production at some 30 GM plants.

Wall Street analysts have expected American Axle to get most of its demands, a view that has supported its stock price. American Axle's shares are up 21 percent so far this year.

AGREEMENT HIGHLIGHTS Key points of a tentative contract agreement between American Axle & Manufacturing Holdings Inc. and the UAW. The details are based on a summary of the contract provided by the UAW and a union official. -- Hourly wage rates to be cut to a range of $10 to $26. -- Wages at the flagship Detroit plant would range between $14.35 and $26 per hour. -- American Axle will offer payments of up to $105,000 over three years in exchange for lower wages. -- American Axle will offer buyouts of up to $140,000 for employees who leave the payroll. -- The voluntary buyout program will be offered 14 days after contract ratification and would include 45 days for workers to consider their options. -- Workers who opt for the buyout will leave American Axle by Feb. 1, 2009. -- New production hires to start at wages of $11.50 per hour, skilled trades workers to start at $22.00 per hour. -- A signing bonus of $5,000 to be paid to each worker following ratification. -- A forging plant in Detroit would close within six months, while another forging plant in Tonawanda, N.Y., would be shut down between six months and a year after ratification. -- American Axle would invest $170 million to $200 million in remaining U.S. facilities. -- The new contract, if ratified, will run until Feb. 25, 2012. -- Worker contributions to health insurance would increase 3 percent annually starting in 2010; retiree health-care benefits would be unchanged. -- Supplemental unemployment benefits, a form of wages paid to workers who are laid off in addition to public unemployment benefits, would be capped at $18 million for the company as a whole with funding provided by GM.