Posted by: David Welch on May 1, 2008
There’s little arguing that American Axle’s initial demand that its union workers take a 50% pay cut is harsh, maybe even excessive. That $14 an hour wage would be less than union workers at some rival parts makers earn. And given the fact that American Axle is pretty healthy and has a nice flow of business from General Motors, undercutting some other parts wages might not be needed.
But here’s the problem facing the United Auto Workers. They have very little leverage. About 80% of the company’s business comes from GM. The auto maker ‘s dealers have plenty of pickups and suvs despite the fact that the two-month strike has idled or reduced production at 10 GM assembly plants, most of which make trucks.
Now the UAW has even less leverage because GM’s move to cut a shift at four truck plants means they don’t need the truck axles that the striking UAW members aren’t making. In fact, an American Axle plant in Mexico can make enough parts to give GM what it needs so long as those shifts are cancelled. Sure, the strike is hurting American Axle. But the company has plenty of cash. And GM won’t intervene to help solve the strike. Unless truck sales take a sharp and very unexpected turn upward, GM won’t need to get involved. And so the picketers will march on, but for what?