American Axle Strike Takes Down More GM Truck Plants

By Chris Haak

02.29.2008

The strike that the UAW undertook starting Tuesday, February 26 against American Axle and Manufacturing has begun to require certain GM truck plants to close. In spite of American Axle stockpiling parts in the weeks leading up to the strike, yesterday (just two days after the start of the strike), GM closed its Pontiac, Michigan truck assembly plant, which builds Chevrolet Silverado and GMC Sierra pickups. The plant builds about 433 pickups per day and employs around 2,500 workers.

Later today, the Flint truck assembly plant and its 2,100 workers will also be idled as it runs out of American Axle-supplied parts. The Sunday night third shift will be the first one affected by the parts shortage.

American Axle produces almost 80% of the axles used by GM, including parts used on nearly every SUV produced by GM. The company and the union appear to be very far apart, with management seeking wage cuts and employees feeling personally betrayed by the company.

At the moment, GM does not appear to be particularly concerned about the strike. In the short term, GM also somewhat overproduced trucks in January in anticipation of an American Axle-caused shutdown. In fact, GM’s overall truck inventory in terms of days’ supply jumped from an 83 day supply as of January 1, 2008 to a 113 day supply as of February 1, 2008. Meanwhile, GM’s car production – which is mostly front wheel drive and therefore not affected by this strike – kept better pace with demand in January and went from a 57 day supply to a 59 day supply. (The industry generally considers a 60 day supply of unsold vehicles to be ideal). Therefore, a short American Axle strike might actually serve to help GM reduce its inventory of unsold trucks.

Now, should the strike last for a while – which seems entirely possible, given how entrenched the sides are in their negotiating positions – GM could be harmed by the strike, because 58.3% of GM’s sales last year were trucks. If the truck supply ran out, GM would suddenly be without more than half of its potential sales.

UPDATE, 12:30 p.m.: In addition to the Pontiac and Flint plants noted above, the Ft. Wayne, Indiana and Oshawa, Ontario truck plants will also be idled this weekend due to strike-related parts shortages.

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