Wednesday, April 30, 2008

American Axle Strike

American_axle The Washington Post has an interesting article on an employer that has gone from hero to goat in the eyes of its employees:

American Axle and Manufacturing employees viewed their boss Richard E. Dauch as a hero. He bet against the odds when he led a group of investors who bought five decrepit auto parts plants 14 years ago. An outspoken champion of American manufacturing, he backed his words by pouring $3 billion into modernizing the old factories. The strapping Dauch often walked the assembly line, stopping to arm-wrestle employees or to ask about their children.

But times are changing, and Dauch is reneging on a critical part of the wager. The America-first chief executive says he can no longer afford the $73 an hour his employees cost. Without worker concessions, he said American Axle's five major U.S plants could be forced to close. His employees aren't buying it. They walked out Feb. 26 after rejecting the company's demands that the union said would cut wages in half. The job action has idled not only the 3,650 striking employees but also tens of thousands of workers in related industries. . . .

For years, Dauch told his workers that if they embraced technology and were dedicated to making better axles, they would prosper with the company. By most every measure, American Axle has made good products. It invested substantial sums in worker training and new manufacturing systems. Orders poured in to make parts for sport-utility vehicles and pickup trucks that provide the bulk of its business. Workers did well, too, averaging $28 an hour in wages, with generous benefits.

But as SUV sales have fallen, even Dauch could not continue business the same way in the face of competitors who pay their workers far less for the same work. Two of Dauch's largest U.S. competitors that fell into bankruptcy, Delphi and Dana, have negotiated labor agreements that are less than half as costly as Americans Axle's, according to the company. Meanwhile, foreign firms that operate in the United States, including Bharat Forge, have far cheaper labor deals. Auto parts plants overseas have even lower labor costs.

The strikers see the job action as a last stand for the kind of factory wages that have supported the middle-class lifestyles of millions of manufacturing workers. Some have lashed out against free trade in response to the company's threat to move work out of the country to save money. If a profitable company refuses to maintain their wages, the workers ask, who will?

That final question pretty well sums up the union's position, although it ignores the fact that a company may be profitable in the short-run, but still be threatened in the long-run if its competitors are able to operate with significantly lower costs.  In the end, however, much of this dispute appears to revolve around exactly what American Axle's costs look like, with the union disputing the $73 and hour number among others.  Nothing like a strike to test each party's contentions, so we'll see what happens.

-JH

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