GM offers $200 million in bid to end Axle strike
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By Kevin Krolicki and Soyoung KimDETROIT (Reuters) - General Motors Corp has offered American Axle & Manufacturing Holdings $200 million in a bid to clinch a speedy resolution of a strike against a key supplier that has run for more than two months.GM made the disclosure in a filing with the U.S. Securities and Exchange Commission on Thursday.American Axle, which in ongoing talks has pressed the United Auto Workers union for deep concessions on labor costs, said the GM offer hinged on a quick resolution to the strike.Analysts said it would clear the way for GM to restart production of hot-selling models like the Chevrolet Malibu and Buick Enclave."We have recently agreed with American Axle that we would provide them with upfront financial support capped at $200 million to help fund employee buyouts, early retirements and buydowns to facilitate a settlement of the work stoppage," GM said in its filing.GM spokesman Dan Flores, reading from a prepared statement, said in a telephone call with Reuters: "We believe that the offer will help bridge the gap between American Axle and the UAW and the two parties will be able to reach a mutually satisfactory settlement in the near future."A UAW spokesman was not available to comment.American Axle spokeswoman Renee Rogers said the funds GM would provide would not have to be repaid by the supplier, which was spun off from the automaker in 1994.In addition, GM has not asked for concessional pricing on future component shipments to offset the money it is offering to broker a quick end to the work stoppage, she said."GM is our strategic partner, and this is what strategic partners do," Rogers said.Shares of American Axle moved higher after the announcement, gaining almost 2 percent on the New York Stock Exchange. GM shares were down 1 percent.Although GM remains American Axle's largest customer and the UAW strike against the supplier shut down most of GM's North American production of large trucks and SUVs, the No. 1 U.S. automaker has said that it had no intention of becoming involved in the dispute.But by offering $200 million to pay for UAW buyouts at Detroit-based American Axle, GM appears to be gambling it can break a logjam in the talks and clinch agreements to smooth its own labor disputes with the union, one analyst said."I think they are very close to agreement. I would be surprised if they don't wrap things up in a week," said IRN Inc analyst Erich Merkle.DEAL FRAMEWORK IN FOCUSUAW-represented workers went on strike at American Axle plants in New York and Michigan on February 26 after contract talks broke down.Over the past several weeks, bargaining teams for the union and the parts supplier have neared agreement on the framework for a contract deal, people familiar with the talks have said.That deal would nearly halve hourly pay to some $14 for production workers, close forging facilities in Michigan and New York and shift to plant-by-plant contracts for the remaining American Axle operations.American Axle has also indicated that it would make one-time buyout offers to existing workers who leave the payroll and "buydown" payments to those who would stay on at the lower hourly wage rates.GM has idled 32 facilities because of shortages of axles and related components needed for trucks like the Chevrolet Silverado. The sharp, recent drop in truck and SUV sales has allowed GM to offset lost production with inventory.But UAW local bargaining units have also shut down production at a GM plant in Fairfax, Kansas, and near Lansing, Michigan, where the automaker makes the all-new Malibu sedan and the Enclave and a pair of other crossover vehicles.Although those work stoppages were prompted by disagreements over factory-level work rules, analysts see the local strikes as a way for the union to put pressure on GM to help broker a settlement in the American Axle case."They (GM) really need to produce those vehicles," IRN's Merkle said. He added that the truck market was almost certain to stay weak this year, meaning union negotiators would be forced to accept many of the concessions American Axle had pressed for in a new contract."The UAW didn't really have any leverage. The market's not really helping the UAW's position," Merkle said.(Editing by John Wallace, Toni Reinhold)
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