GM may have hit their breaking point in the UAW-American Axle strike. Automotive News [sub] reports The General is moving "a small but important parts contract" from American Axle (AA) to Dana Holding Corp. The contract is for 30k prop shafts for light trucks which Dana says they can start supplying "in a matter of weeks." Given the volume of parts GM needs to keep their factories running, a contract for 30k items doesn't sound like much and in the grand scheme of things, it isn't. But it does represent a warning shot across AA's bow, letting them know their biggest customer isn't happy and they aren't the only parts supplier in town. Now that AA stands to lose contracts because of the strike, you can bet CEO Dick Dauch will take action, most likely shifting more production to Mexican plants.
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“Small but important”
30K units?
Hybrid SUV’s?
Wow…talk about a shot across the bow.
“production to Mexico”…just what we need. I was away on vacation, so I missed why there is a strike…UAW being greedy or AA trying to fleece its workers? In any event, GM should have enough supplier diversity to prevent being held hostage to any one supplier of critical components.
Shot across whose bow? AA or UAW or both?
The union will not capitulate this time. Afterall, AA made money last year so they should keep what they are making. It does not matter to them that AA profits in the US have been decreasing over the years.
Had the CEO been a decent person, he wouldn’t have flaunted his pay raise. It kind of reminded me of the early 1990s when us salaried folks started paying co-pays and deductables for our healthcare and the hourly folks ridiculed us for not having a union who would protect our interests.
Karma’s a bitch, ain’t it?
jolo
Shot across whose bow? AA or UAW or both?
More AA than the UAW, as they’re shifting the contract to another UAW plant. The Dana plant is in a different local than the AA plant, but it’s still UAW.
golden2husky
I missed why there is a strike…UAW being greedy or AA trying to fleece its workers?
AA wants to cut wages to approximately half of what they are now. The UAW said “the hell you will!” and walked out. Neither side is willing to budge, and in fact, their full negotiating teams haven’t even met since mid-March. Our Union News category has a blow-by-blow account of the entire sordid mess.
I suspect that because AA is one of the few suppliers to UAW manufacturers that made a profit they can afford to play hard ball with them, and rightfully so. It’s not like GM et all where the company continues to lose money yet the executives all get fat bonuses.
Leadership helped steer the company to a profit under adverse conditions. They deserve a little bit of credit. They’re also well aware of the situation their customers are in and know they are going to have to cut expenses in order to survive. The UAW not working with them is not a good thing for the UAW members. Have they looked at the job market lately? It isn’t pretty out there.
jolo: Don’t be so sure that the UAW is going to cave.CEO Dauch got his raise,but it gives the strikers a little more resolve.
And jolo I’ve never ridiculed the f—ing over that lower level salary got.If your in the buisness, you and I both know that with 30k of prop shafts with 14 day lead time.Its a classic case of too little too late.
That’s one prediction I made coming true, although in a small way. I would revise that to say “the first shot across the bow”. Because I would be very surprised if there weren’t more. I guarantee these first 30k parts are basically payment for Dana to do the prep work for taking on more parts in the very near future. More to come I’m sure. Wait for it… wait for it…
Mikey, maybe you didn’t, but there were plenty of us that were by your fellow uaw folks. And as I said before, the uaw will not capitulate. I never said I was sure they would cave. I’m positive they won’t and it will be to the detriment of everyone involved.
It’s a no-win situation for the UAW, but I agree with them that it’s time to kick over the table. With prices going up, there’s no point in working for a wage they can’t live on. If they’re going to lose their houses anyway, why not take the company down? This country is sinking like a rock; people have to wake up. Somehow the govt. came up with $30B to bail out Bear Stearns with more on tap as needed for whom needed, so maybe something can be done for a major industry. This economic collapse is going to be one hell of a show.
He probably got a raise because no sane person would take a CEO job in the auto industry.
Mel,
You’d endorse someone to go kicking and screaming and wreck even more jobs because they already are being paid more than the average non-union blue collar worker with better benefits?
That just doesn’t make sense to me. I understand the principal of it, but you are asking a few people to cause enough disruption to kill potentially thousand s of jobs throughout the industry. Times have changed.
As for Bear Sterns, I was under the impression they were being bought by JP Morgan (as facilitated by the government) instead of an outright infusion of funds from the government. Can anyone shed light on that one?
mel23
If they’re going to lose their houses anyway, why not take the company down?
The problem is that they won’t take the company down. Unlike many other auto suppliers, American Axle is quite healthy and has plants in 12 countries besides the U.S. Dauch has already shifted some production to a plant in Mexico and has threatened to move all production offshore. It won’t take much from the UAW to make him carry through with his threat.
Sorry rolo: Forgot to put glasses on,seems to make real difference these days.I havn’t worked on the assembly floor for quite some time.In my world I work with the salary guys,and for the most part we have mutual respect for each other.
Though the trend these days is to dump the old well paid/experieced superviser.Just like the union guys thier replacements are 35K a year contract kids.Now a few of them come in with an attitude,a few not all.
A few of them have a chip on thier shoulder,and they resent the old fella sitting at the keyboard making twice as much money.
Its been my experience,that even the dumbest people can sense,when thier being talked down to.
This is where the nasty comments come from.
“The problem is that they won’t take the company down.”
You’re right; poor wording on my part. My comment relates to the larger trend of companies prolonging their survival by squeezing the workers who have been buying their products. The suppliers have been driven into bankruptcy and closed many plants, the GM dealers had their markup halved with whatever GM called their ‘true value’ pricing. Considering the national economy, it has worked for a while as we’ve offshored jobs and closed plants, but obviously it is a deadend that we are approaching. I don’t know the numbers of what percentage of the Big 3 customers consist of their employees and those of their suppliers, but I doubt it’s unrealted that they sell best in the Midwest where their plants of those of their suppliers are and sell poorly on the coasts. A $14 an hour worker won’t be buying a new vehicle, paying a mortgage, etc. Of course this reality that people will buy less as their income declines, had to eventually come home to roost. The powers that be have shown absolutely zero concern for the sinking of this economy as it decimated one industry after another; really even very little lip service was heard. Ditto with the falling currency, and the significance of the long-expected, make that guaranteed, crash of the housing bubble was denied. “Oh, it’ll be contained and won’t spread to the overall economy”. Yeah right. But the Bear Stearns fiasco got their attention. Too late I’m afraid for anything like a fix that will avoid having to deal with years of neglect after time for the easier solutions might have worked. The point is that too many people have nothing, or not much, left to lose anymore with any of the choices available to them.
Mikey,
As one of those $35k contract kids, can you really blame us? I mean, everyone I work with has a degree and has taken all the training that all the sales people need to take. Then, we don’t get benifits, we don’t get a company set of wheels, we have a joke of a suppliers discount, and a possible hope of maybe in a year or so, if something opens up and we are lucky and everyone above us who is GM decides to skip on it, might get promoted into GM from our contractor. Meanwhile, some kid down at the Delta Township or in Lansing who may have a GED is getting paid damn near 80K a year with full benefits just to screw in a dome light.
Virtual Insanity,
I hear ya! Hang in there.My guess in the next 2yrs or so your going see the largest turnover hourly and salary the company has ever seen.
The CEO flaunted his pay raise?
Are you sure he didn’t just disclose it as required by law for publicly traded companies?
Also, was his raise REALLY that big, or did the way that API calculates the value just make it look that much bigger than last year?
I actually respect BW for this move. Sends a message to the UAW.
So where does all this lead us? Back in the days when the UAW ruled the roost, we had poor productivity, lousy workmanship and unreliable cars. Those problems are largely behind the American producers, but what about the fate of America’s work force? Manufacturing jobs are going the way of the dodo. As more work ends up offshore, the standard of living declines and the disparity between the upper wage earners and the “middle” class opens wide. The loss of a real middle class is the beginning of the loss of the America that offered opportunity to everybody. The present administration only cares about the top .5% of the population – the haves and the have mores as stated by George Bush. So, if government policy only cares about the wealthy (and some scraps tossed to the truly poor) and union representation becomes meaningless, what becomes of the “masses”? Education, often batted about as the cure-all, alone is not going to do it. Remember those kids who grew up in union households who saw Dad lose his job and dignity? They trained for the future – typically some computer related career. Trained just in time to see their jobs outsourced to India. I am afraid that we best prepare for a decline in our standard of living.
@golden2husky:
A decline in the standard of living could actually be a much-needed correction in the market. After years of Bush pushing everyone into owning a house (especially minorities) whether they could afford it or not…people signing contracts they didn’t understand…the explosion of adjustable rate mortgages…the constant raiding of equity to buy TVs, cars, boats and other things, the middle class has finally stopped overreaching (and overspending). Maybe in the future a more natural course of growth can be sustained.
And it’s not up to the government to prop the middle class up, either. This isn’t a communist country…yet.
I’ve spoken my piece about the manufacturing sector more than once before, but it bears repeating: It’s just not that important anymore. It’s too volatile. Rather than whining about it and possibly adding some disastrous protectionist legislation, people should just let the market work. (What a concept!) The falling dollar has made American labor cheap, and all the Euro manufacturers are considering adding capacity here in the good ol’ USA, since labor there is so expensive. If they build American plants with American labor to sell to Americans, they may very well want to use American suppliers (probably not American Axle, though) so they aren’t shipping everything across the Atlantic.
Education can’t create job security alone, you’re right. Flexibility can help. This will probably (not) set Farago off, but I think expanding your focus is a good idea. A lot of people I know (especially men) are taking their degrees and staying a bit longer to get teaching certification.
So everyone there woke up one day and found themselves in a tough spot with AA and their jobs. Maybe if they were paying attention the past few years they would have squirreled away a few dollars, learned a new skill, and started working on a plan B. GM is working on plan B,C and D. While we may watch them make dumb mistakes constantly, they do take evasive action when needed. AA is a test balloon for the rest of it, the next deals will be quicker and bigger, involving more outside suppliers.
In 3 years most of GM’s content will come from non union shops. I bet 75% of all the parts and anything critical to building vehicles will NOT be in the hands of the UAW.