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GM forced to shut down pickup truck plant

A strike at a key parts supplier is starting to have an impact on General Motors, which said Wednesday it will temporarily close a pickup truck plant in Pontiac due to a parts shortage.
/ Source: The Associated Press

A strike at a key parts supplier is starting to have an impact on General Motors Corp., which said Wednesday it will temporarily close a pickup truck plant in Pontiac due to a parts shortage.

The Pontiac Assembly Center, which makes Chevrolet Silverado and GMC Sierra pickups, will stop production after the first shift Thursday due to the strike against parts supplier American Axle and Manufacturing Holdings Inc., GM spokesman Tom Wickham said.

The assembly plant has about 2,500 hourly and salaried workers. Hourly workers will get most of their pay under their contract with GM.

About 3,600 workers represented by the United Auto Workers at five American Axle plants went on strike early Tuesday in a contract dispute. The strike continued Wednesday night with no talks scheduled and each side saying it is waiting for the other to return to the bargaining table.

American Axle is using stockpiled parts to keep supplying GM and its other customers, although it would not say how long the supply will last. The company makes axles, drive shafts and stabilizer bars.

"We're meeting our customers' requirements. We continue to supply our customer needs to the best of our ability," American Axle spokeswoman Renee Rogers said Wednesday night.

GM accounts for about 80 percent of American Axle's business, with 10 percent going to Chrysler LLC and the rest to other automakers. The Detroit-based supplier makes all the axles for GM's full-size pickups and large sport utility vehicles.

Aaron Bragman, an auto industry analyst for the consulting company Global Insight, said GM likely is shutting down the Pontiac plant to keep the parts supply flowing to its other pickup truck factories.

GM also makes full-size pickups in Flint; Fort Wayne, Ind.; Oshawa, Ontario; and at two plants in Mexico.

Bragman said the automaker's strategy is an indication that GM is preparing for a lengthy strike.

"It looks like GM expects this is going to take longer than a couple of days," he said. "If that is the case ... this would be the most logical course of action."

Unless the strike is lengthy, GM is unlikely to be hurt by the parts shortage because the company has more than a 150-day supply of pickups, analysts have said. But after a few weeks, the plant closings could spread and affect companies that supply other parts for GM vehicles, they said.

The UAW said American Axle is demanding wage reductions of up to $14 an hour as well as elimination of future retiree and pension benefits. The company also failed to provide the union with enough information to evaluate its proposals, the union said.

American Axle, however, said the union should give the company the same wage concessions it has agreed to at other suppliers and automakers.

Rogers said the company invested $3 billion in its U.S. plants and is willing to invest more.

"But we have to have structural changes so that those plants can compete. If we can't get that, they're in immediate jeopardy," she said, refusing to elaborate.

A message was left for a UAW spokeswoman Wednesday night. A local union official said Tuesday that the UAW was awaiting word from the company about returning to negotiations.

The UAW's recent contracts with the Detroit Three automakers, which established lower wages for thousands of non-assembly workers, have set the stage for tough negotiations at some of their suppliers.

American Axle's manufacturing workers can make up to $65 an hour in wages and benefits, which is on par with assembly workers at GM, Ford Motor Co. and Chrysler LLC. The company wants to cut that to $20 to $30 an hour, which would be similar to the agreements reached between the UAW and non-assembly workers at the automakers as well as other auto suppliers such as Dana Corp. and Delphi Corp.

American Axle earned $37 million in 2007 on sales of $3.25 billion.