American Axle CEO Dick Dauch hung tough against the United Auto Workers (UAW) for 87 days. As the smoke clears, it's clear Dick Dastardly came out on top. The new union contract cuts the company's average hourly labor costs from $73 to about $40. The Detroit News reports that DD also sliced some 2k workers from AA's 3,650-member North American workforce. All in all, the parts maker will realize some $300m in annual savings. To help show these workers the door, AA secured some $215m worth of OPM from GM. That's roughly half the $450 to $500m tab. Meanwhile, AA shed some $370m in lost sales. Put those numbers against each other, and it looks like AA recovers its strike expenses in less than a year (excluding lost sales), and powers on from there. Meanwhile, Automotive News (sub) reports that AA has a $1.4b in backlogged orders to be filled between now and 2013. Mr Dauch celebrated the good news today by promoting his son, David Dauch, to the position of President.
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Rabid Rick – take note…here’s a real CEO doing his job well (even got you for $215m!).
Mr Dauch celebrated the good news today by promoting his son, David Dauch, to the position of President.
Aaaaah, American meritocracy…
Lots of those AA workers making “$73” an hour, or whatever it was, bought new GM products with AA components. Not many of them, or their replacements, making much less, will buy new vehicles. We’ll have to wait a couple of years to see how this plays out. But of course they can, and will, continue to increase the Mexican production. I don’t think this is going to work out so well, but of course another CEO gets richer riding his company down.
If your own workforce is a major source of sales, you’re doing it wrong.
Or to put it another way, you really think 3000 people were spending 100,000 a piece in car parts a year, cause thats what it would have to be for AA to merely break even on the deal.
The whole Ford “workers must be able to afford the product” thing is right, but not because it really matters if the Ford Workers themselves are buying the cars. Its a benchmark; if a factory worker can afford our products, its accessible to enough people to be a success. Very important, especially then when the car market was new. Internal sales are great and all, but ultimately are mostly irrelevant.
Nice! More middle class carnage, and some of the TTAC faithful are ready to pop the corks. Let’s recap: Fat cat gets fatter, average guy gets to work just as much for much less (THAT should help quality control), and nepotism rears its head for sonny boy. Nobody sees a problem with this? America is headed to also-ran status in a big way.
golden2husky:
Nice! More middle class carnage, and some of the TTAC faithful are ready to pop the corks.
The carnage Caterpillar shoved down workers’ throats years ago when they went toe-to-toe with the UAW is sure paying off (for the workers) now.
income cut has to hurt, but I’d rather see people working, at $40 an hour all in, than not working at $75 an hour all in.
How easy would it be to send production to china or india?
If they fired all and posted the $40 an hour jobs, there would be an inbound stampede from all quarters.
What is left unsaid is what sort of ongoing price reductions AA had to promise to get GM to open up it’s wallet. It’s probably close to a wash over a year or two.
$40 an hour for a job requiring no education, or skill, what a terrible burden these (upper)middle class workers have to bear. There are only a few million people working at Walmart who would kill for a job that pays half that much. There is no organization with more greed or nepotism than the “work an hour – you’re a hero” UAW, whatever is bad for them is good for America. I’ll keep that champaign on ice for the UAW goes away for good.
AA workers weren’t making $75/hr. Nor are they making $40/hr now.
So now a profitable company is going to become a really profitable company. I’d say the AA CEO is doing a damn fine job… but I bet he makes quite a bit less than any of the Not So Big 3 CEOs.
Has AA been a family business for a while, or did this guy just decide nepotism was due for a comeback?
Not that it matters. If the stockholders aren’t paying attention (which they aren’t) they just hire each others kids at different companies.
I thought American Axel was a GM spin off from years gone by when they stopped making their own parts? How did sonny boy end up in the driver seat. More of this countries manufacturing offshored and demoted to keep some pricks wallets fat. It may not sound significant when you just look at one supplier, but its not isolated to just them, hard to sell cars to people who used to be your loyal customers if they cant afford them anymore because the economy sucks and you have cut their paycheck or job entirely.
quasimondo :
May 29th, 2008 at 9:41 pm
AA workers weren’t making $75/hr. Nor are they making $40/hr now.
Those figures are what each employee cost the company. That is, they include sick time, vacation time, pensions, medical, dental, taxes, everything. Take home pay is/was about half that.
And in Canada, Buzz did it to his own boys again…
Great job buzz!!!
http://ca.news.yahoo.com/s/capress/080603/national/gm_cuts_workers