Posted by: David Welch on April 18, 2008
There’s plenty of murmuring in Detroit that a local strike at a crucial General Motors factory in Lansing, Mich. and threats at two more assembly plants aren’t just about local issues. While the United Auto Workers union denies it, some think that the union is trying to get GM to intervene in a six-week work stoppage at American Axle & Manufacturing Inc. GM relies on American Axle for key parts for most of its truck plants and some car plants. Some of those Axle workers were GM employees back before American Axle was created out of GM’s old in-house parts business back in 1994. So if GM would just take some workers back, or give the two sides money for buyouts or even just guarantee Axle some parts business at a rate that makes its labor profitable, all would be swell.
But enough already. GM has already taken $7.5 billion in expenses helping bankrupt Delphi Corp., which was created in 1998 when GM spun out most of its parts unit. GM also has loaned Delphi another $2 billion. The reason: GM was contractually on the hook for some Delphi retiree benefits and the parts firm’s workers had the right to take openings in GM’s plants. There were legal ties that kept GM in the fold when Delphi entered Chapter 11. American Axle Chairman Richard Dauch and has no such contractual claims on GM. GM has been restructuring since 2005 and still can’t make a buck in North America. Dauch’s company was profitable last year (albeit thinly) and his compensation packages over the years have been quite fat. So have the union’s wages in Dauch’s plants, which pay more than most parts jobs. Between the two of them, they should be able to cut a deal without any help from old GM.
Both sides deny that they’re asking GM for help. But should GM executives feel pressured to get involved, as Detroit carmakers have during parts strikes in the past, they should say no. GM Chairman and CEO Rick Wagoner and his new President and COO Fritz Henderson have enough to worry about, like making money, pleasing a group of investors who grow more impatient by the day, weathering a recession and figuring out what tougher fuel economy rules will do to their business starting in 2010. Helping another parts dispute, especially one that is 14 years removed from being part of the GM family, is someone else’s job.