As American Axle Strikes, GM Idles Plant
|Topics: American Axle, General Motors
April 2, 2008
General Motors Corp. shut down its Hamtramck Assembly Plant in Detroit due to parts shortages caused by American Axle and Manufacturing Holdings Inc.’s monthlong strike. The strike made by GM’s supplier affected just over 39,000 hourly workers.
The shutting down of the facility Monday is a sign that the strike cuts deeper into the automaker’s lineup. In a statement, the Detroit automaker said it shut down its sedan plant, which employs 1,849 hourly workers and makes the Buick Lucerne and Cadillac DTS. To note, the Hamtramck Assembly Plant is the 29th facility that has fully or partially shut because of the strike.
Previously, the strike had affected the assembly of GM parts for slow-selling pickups and SUVs. On Feb 26, GM’s inventory reflected as much as 150 days' supply of some of those vehicles. The automaker was even quoted as saying the strike doesn’t hurt sales.
But the automaker might be singing a new tune in less than no time. As the strike continues, it cuts deeper into GM’s inventories. According to Ward's AutoInfoBank, sales of both the Lucerne and the DTS were down 20 percent in the first two months of this year. In February, GM had only a 59-day supply of the DTS and has been relying on improving sales in its Cadillac division.
Lache estimated Monday that the strike is costing GM $220 million per week, although he said GM would have had to cut production anyway due to the weak economy so it's difficult to gauge the precise impact, according to BusinessWeek. Lache said it could be another six weeks before dealers start to feel a pinch.
"I don't think there's a strong incentive to end this strike, given how weak demand is. We're in an auto industry recession," Lache said.
Lache estimated the strike is costing Lear Corp., a Southfield-based supplier, $10 million each week and Magna International Inc., an Aurora, Ont.-based firm, $7 million each week. “Lear isn't giving regular updates of how many plants and employees are affected, but at least 10 Lear facilities and 1,200 workers have been idled,” said spokeswoman Andrea Puchalsky. She added GM's Hamtramck plant is among those to which Lear supplies seats and other parts.
The United Auto Workers and American Axle had no official talks scheduled Monday, said spokeswoman Renee Rogers. Talks have been continuing sporadically, but the two sides' full bargaining teams haven't met together since March 10, she added.
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