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GM closes more plants; 12,000 workers idle

General Motors Corp. may close two additional factories next week as the impact of a strike at a key parts supplier widens.
/ Source: The Associated Press

General Motors Corp. may close two additional factories next week as the impact of a strike at a key parts supplier widens.

The nation's largest automaker has announced that it will temporarily shutter four plants that make full-sized pickup trucks, idling 12,000 workers in the U.S. and Canada.

Three of the closures, in Flint, Fort Wayne, Ind., and Oshawa, Ontario, were to take place Friday night, on top of o the idling of a pickup truck factory in Pontiac on Thursday.

The plants are running out of parts supplied by Detroit-based American Axle and Manufacturing Holdings Inc., according to GM spokesman Tom Wickham. All four make the Chevrolet Silverado and GMC Sierra full-sized pickups.

About 3,600 workers represented by the United Auto Workers at five American Axle plants in Michigan and New York went on strike early Tuesday, mainly over a wage dispute. No negotiations are scheduled and each side says it awaits a call from the other to return to the bargaining table.

American Axle makes axles, drive shafts and stabilizer bars.

Hourly workers at GM who are laid off as a result of the plant closures will get most of their pay from the company under its contract with the UAW.

Wickham would not speculate about further plant closures, but industry analysts have said American Axle also makes components for GM's large sport utility vehicles, and factories that build them could close early next week.

Factories in Janesville, Wis., and Arlington, Texas, that make the large SUVs still were operating on Friday. Their vehicles include the Chevrolet Tahoe and Suburban, GMC Yukon and Cadillac Escalade.

GM also was continuing to produce pickups and large SUVs at a factory in Silao, Mexico. It also makes a small number of pickups at a plant in Toluca, Mexico.

Erich Merkle, vice president of auto industry forecasting for the consulting firm IRN Inc. in Grand Rapids, said it's likely the Janesville and Arlington plants will be closed next week.

"I'm sure it will spread to the SUV plants," he said.

American Axle had been using stockpiled parts to keep supplying GM and its other customers, although it appears those supplies are running out.

GM accounts for about 80 percent of American Axle's business, with 10 percent going to Chrysler LLC and the rest to other automakers.

Chrysler spokeswoman Michele Tinson said it has enough parts to last two or three weeks before any plants are idled.

American Axle makes axles for Dodge Durango and Chrysler Aspen SUVs made in Newark, Del., and two versions of the Dodge Ram pickup made in Saltillo, Mexico, she said.

Chrysler was affected by labor problems at another supplier. The automaker was forced to temporarily close its Windsor, Ontario, minivan plant on Thursday due to a Canadian Auto Workers strike at a TRW Automotive parts plant. Negotiations are continuing.

Unless the American Axle strike is lengthy, GM is unlikely to be hurt by the parts shortage because the company has an ample supply of pickups and large SUVs, analysts have said.

GM has more than a 150-day supply of pickups and more than 100 days' worth of the SUVs, Merkle said.

The UAW has said American Axle is demanding wage reductions 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.

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 parts suppliers.

American Axle says its manufacturing workers can make up to $73.48 per hour in wages and benefits, three times the rate at its U.S. competitors. 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 and at suppliers such as Dana Corp. and Delphi Corp.

"AAM cannot accept terms and conditions that put the company at a significant competitive disadvantage in the U.S. automotive supply industry," Chairman and CEO Richard Dauch said in a statement Friday.

Erv Heidbrink, president of a UAW local at an American Axle plant in Three Rivers, said he has great respect for Dauch, who built the company into a profitable firm out of a group of plants purchased from GM.

The union, Heidbrink said, realizes it must move to lower wages, but American Axle isn't offering the same lump-sum payments, buyouts or early retirement packages that other companies did.

"We're certainly open to buy downs, buyouts, early retirements," Heidbrink said. "People deserve to continue raising their families in a dignified manner. Their demands would really take that ability away."

GM shares closed down $1.22, or nearly 5 percent, at $23.28 on Friday.