The United Auto Workers began a strike against auto parts maker American Axle & Manufacturing Holdings Inc shortly after midnight on Tuesday after failing to reach agreement on a new contract.
The strike encompasses some 3,600 workers at American Axle plants in Michigan and New York whose four-year contract expired just before midnight Monday after an impasse over cost-cutting demands from the auto parts supplier.
American Axle said the union was in effect singling the company out for demanding wages and benefits about equal to those that rivals now have under their own UAW agreements.
Workers in Detroit walked off the job shortly after midnight and quickly formed a picket at a gate trudging through a blanket of snow and carrying signs that read “Unfair Labor Practices” and “UAW on Strike.”
Analysts have said a prolonged UAW strike against the Detroit-based company has the potential to disrupt production of trucks and sport utility vehicles by General Motors Corp, which ranks as the supplier’s largest customer.
American Axle had stockpiled parts for GM with the chance of a work stoppage looming. GM accounted for nearly four-fifths of American Axle’s revenue last year.
The United Auto Workers said the strike had begun at 12:01 ET on Tuesday. Talks broke off Monday with major issues unresolved, including demands for wage cuts of up to $14 per hour, the union said.
Elimination of future retiree health care and defined benefit pensions were also issues, the UAW said. The union also said American Axle failed to provide the UAW with information it needed to evaluate the proposed cuts.
The UAW has a “proven record” of working with companies, ”but cooperation does not mean capitulation,” UAW President Ron Gettelfinger said in a statement.
American Axle said its ability to maintain production at those locations or compete for future business would be in ”immediate jeopardy” without sweeping union concessions.
The UAW contract covers facilities in Detroit and Three Rivers, Michigan; Tonawanda and Cheektowaga, New York; and a Buffalo, New York, plant idled in late 2007. The UAW also represents American Axle workers at other facilities covered under a different agreement that did not expire.
In a statement, the Detroit-based company said the union had “singled out” the supplier by refusing to allow it to cut hourly labor costs that are three times higher than its rivals at over $70 per hour.
“All of the changes we have proposed have been accepted by the UAW in agreements with our competitors in the United States,” Chief Executive Dick Dauch said in a statement.
The union said it had made proposals that would have reduced American Axle’s labor costs significantly and given it operational flexibility.
The strike marks the third auto industry walkout by the UAW in recent months in North America. The UAW called brief strikes against GM and Chrysler LLC last year before reaching historic agreements that allow the Detroit-based automakers to cut labor costs as they attempt to return to profitability.
The union has also negotiated buyouts and early retirements with the automakers intended as a way to move higher-paid workers out of those jobs, while protecting their pension and retiree health care in most cases.
Some workers leaving American Axle’s Detroit plant said it was unfair that American Axle was asking for steep wage cuts at a time when it was profitable. Dauch, the founder and CEO, came in for particular criticism from picketers.
“We made this company a lot of money,” said Diane Hurd, an UAW-represented American Axle employee.
Carl Jackson, a 13-year American Axle veteran, said union negotiators told rank-and-file members the company had been unbudging in demands for pay cuts that would cut compensation in half for many workers.
“They threw a proposal on the table and they wouldn’t negotiate,” Jackson said.
Several picketers said they expected they could hold out longer on savings and strike pay than the company could with its stockpile of parts for GM.
“It’s hard for everybody, strike issues are no win for anybody,” said Darek Bazinski, a skilled trades worker.