General Motors Pitches In to Help Its Bottom Line

DETROIT (AP) -- General Motors Corp. (GM) has agreed to kick in up to $200 million to help bring an end to a bitter 10-week strike at parts supplier American Axle and Manufacturing Holdings Inc (AXL).

The automaker said Thursday in a government filing that the money would go for temporary payments to buffer reduced wages for the workers, as well as employee buyout and early retirement packages.

About 3,600 United Auto Workers at five American Axle factories have been on strike since Feb. 26 in a dispute over the company's quest for lower wages and benefits.

The strike has crippled GM's production of pickup trucks and sport utility vehicles and hurt its bottom line. About 30 GM factories have been either fully or partially closed due to the strike.

No deal had been reached between American Axle and the UAW as of Thursday afternoon, but American Axle spokeswoman Renee Rogers said talks were continuing.

"We are hopeful that GM's financial assistance to help fund the buyouts, retirement incentives and buy downs ... will facilitate an expedited resolution to the international UAW strike," Rogers said. "It's been costly and disruptive. A quick return to work will be a win-win-win for everybody."

American Axle said in a separate filing with the Securities and Exchange Commission that the aid from GM is contingent on a quick end to the strike.

"We believe the offer will help bridge the gap between American Axle and the UAW and that they will be able to reach a mutually satisfactory agreement in the near future," GM spokesman Dan Flores said.

The announcement of the GM cash brought optimism to the picket lines at American Axle's complex in Detroit.

"I'm always optimistic when I hear General Motors is going to come in and give money to American Axle to help settle our strike," said Bill Alford, president-elect of UAW Local 235, one of the striking locals. "GM has to realize they've got a vested interest in this company doing well."

Alford said he had not heard from the union's bargaining team since the GM announcement was made.

A phone message seeking comment was left for UAW spokesman Roger Kerson.

American Axle makes axles, drive shafts and stabilizer bars mainly for GM's large SUVs and pickup trucks.

The company has said its hourly labor costs are far higher than those at competitors that have reached agreements with the UAW, and it needs to lower its costs to gain new business. The company has threatened to move work done at its U.S. plants to foreign factories.

GM said in its filing that the strike has not hurt its ability to deliver trucks and SUVs because its dealers had large inventories of the vehicles.

But its North American division lost $800 million due to the strike, and through April, the strike cost GM production of about 230,000 vehicles.

"We anticipate that this lost production will not be fully recovered after this work stoppage is resolved, due to the current economic environment in the United States and to the market shift away from the types of vehicles that have been most strongly affected by the action at American Axle," the company said.

GM also said the strike has cut its liquidity by $2.1 billion but said it has the money to meet its needs even if U.S. industrywide auto sales continue to drop.

The UAW also has gone on strike at two key GM factories and threatened strikes at several others in disputes over local contract issues. Local plants negotiate their own operating agreements separate from the national contract, which was settled last year.

Workers at a factory near Lansing, Mich., that makes GM's strong-selling crossover vehicles -- the Buick Enclave, GMC Acadia and Saturn Outlook -- have been on strike since April 17. A UAW local at another plant in Kansas City, Kan., that makes the hot-selling Chevrolet Malibu midsize sedan has been on strike since Monday. Talks continue at both factories.

Auto industry analysts have said UAW struck the plants to pressure GM into getting involved in ending the American Axle dispute, although union officials have denied any connection. Both plants make vehicles that are selling well for GM even in a slumping U.S. auto market.

Shortly before GM's government filing, a UAW local at a transmission plant in Warren that had threatened to go on strike reached a tentative agreement with GM. Local 909 had threatened to strike April 18 but decided to stay on the job as negotiations continued.

Local 909 President Al Benchich said no date has been set for a vote on the deal, which he said covers seniority rights, work rules and transfers between jobs.

"I feel pretty good, given the economic climate and the general direction of things," Benchich said Thursday. "I think we protected our members' interests."

GM shares fell 25 cents, or 1.2 percent, to $21.15 in Thursday trading, while American Axle shares rose 44 cents, or 2.1 percent, to $21.80.