GM Closes More Plants Due to Supplier Strike
March 28, 2008

By Joseph Szczesny

DETROIT — General Motors' Detroit-Hamtramck car assembly plant, which builds the 2008 Buick Lucerne and 2008 Cadillac DTS, will shut down March 31. The closure is due to parts shortages caused by the strike by workers against supplier American Axle & Manufacturing Holdings, which is entering its second month.

GM confirmed Thursday it will close the plant for an indefinite period.

A GM plant in Janesville, Wis., which builds the 2008 Chevrolet Tahoe and Suburban and GMC Yukon, also will close next week, leaving GM with only two plants producing large SUVs and pickup trucks. An Ohio plant that builds the 2008 Chevrolet Cobalt is at risk for closure soon as well.

GM Closes 29 Plants
The strike by the United Auto Workers union against Detroit-based American Axle, a company formed out of former GM parts operations, has completely or partially closed 29 GM plants (one that closed in Toledo has re-opened) and idled more than 40,000 hourly and salaried workers since the strike started Feb. 26.

The Wisconsin plant already had been operating on a scaled-back schedule in recent weeks not only due to the strike but also slow sales and large inventories of large SUVs.

That leaves GM with two truck plants in operation next week. The Arlington, Texas, plant will be making the Cadillac Escalade and just-launched 2-Mode Hybrid versions of the Chevrolet Tahoe and GMC Yukon. Because of the just-launched hybrid SUVs, GM is working hard to keep that plant open but local union officials say it too is under threat of closure due to parts shortages.

The Shreveport, La., plant, which makes the 2008 Chevrolet Colorado and 2008 GMC Canyon compact pickup trucks, will be operating on a day-to-day basis, GM said.

Officials from UAW Local 1112 in Ohio say GM's car plant in Lordstown, Ohio, where the Chevy Cobalt is assembled, could close as soon as April 4 because the plant is on the verge of running out of a key part for the Cobalt's brake assembly. GM has not confirmed that report.

No End in Sight
David Cole, director of the Center for Automotive Research in Ann Arbor, Mich., said this week the strike between the UAW and American Axle could go on indefinitely as there's been no progress toward resolving the bitter dispute.

The strike by 3,650 American Axle workers is over wages. The company wants workers to accept a contract that cuts the wage of union employees, many of whom were originally hired by GM before American Axle was spun off in 1998, from the current $28 per hour to $11.50 an hour. American Axle has threatened to move production out of the U.S. to low-cost places such as Mexico if the union doesn't give in.

The workers say the company was profitable last year and doesn't need such drastic pay cuts.

The strike grew more bitter in the wake of the announcement last week that top management had received hefty increases in their compensation in 2007 because the company turned a profit. CEO Richard Dauch's compensation package surpassed $10 million, according to documents filed with the government.

American Axle spokeswoman Renee Roger told AutoObserver the two sides have talked by phone and in person in recent weeks. "We have resolved some issues but it’s moving slowly,” she  said.

UAW spokeswoman Christine Moroski declined to say whether the two sides have made any progress.

Still, the union claims American Axle has not met the UAW’s demands for more detailed company financial information. “We have given them all the information to which they are entitled,” said Rogers.

GM: Staying Out of It
GM executives have refused to become involved in the negotiations, in part because for now its has large inventories of unsold vehicles, which makes intervention unnecessary.

“With the two sides far from resolution and no immediate need for GM to get involved, the likelihood of the strike continuing into April is growing," forecasting firm CSM Worldwide of Northville, Mich., said in a recent report. "With an average of over a 120-day supply of full-frame pickups, SUVs and vans, GM can weather such as extended walkout for several months before being impacted.”

Mark LaNeve, GM’s vice president of sales, service and marketing, said right now GM has more than enough inventory to maintain its sales. “At some point that inventory will begin to run out. But it’s tough to say when that point will be,” he said.

The strike, nonetheless, is eating away at GM’s finances. Analysts at Deutsche Bank have estimated the strike is costing GM as much as $300 million per week.•

Joseph Szczesny is a Detroit-based automotive writer and a frequent contributor to Edmunds’AutoObserver, specializing in labor matters.

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