UPDATE 2-American Axle, UAW move toward contract framework

(Recasts, adds comments from people briefed on talks, workers, updates share price, bylines)

By Kevin Krolicki and David Bailey

DETROIT, May 1 (Reuters) - American Axle & Manufacturing Holdings Inc (AXL.N) and the United Auto Workers are nearing agreement on a framework for a contract deal after a two-month strike, people briefed on the talks said on Thursday.

The deal would close at least two plants -- forging facilities in Michigan and New York -- while offering payouts to remaining workers in exchange for wage cuts that would halve hourly pay to $14 for production workers, they said.

In addition, the auto parts supplier would get separate contracts with each of its local bargaining units, rather than the "master" agreement that now governs contract terms for some 3,650 striking union workers.

American Axle shares closed 13 percent higher on Thursday on reports suggesting the two sides were moving close to an agreement that would give the company many of the concessions it has said it needs in order to stay competitive and keep its five U.S. factories open.

Pete Bennett, an American Axle retiree who attended bargaining updates from negotiators representing the company's plant in Three Rivers, Michigan, said workers had been told they would have to be prepared to accept base wages between $14 per hour and $18 per hour to spare the plant from closure.

Even then, he said, the contract was likely to contain a provision that would open the door to closure in a year or so if financial performance weakened.

Another person briefed on the talks declined to be identified because negotiators on both sides had agreed to keep the content of talks confidential.

Details of the contract terms under discussion were first reported by the Detroit Free Press after several workers briefed on the negotiations posted details on the Internet.

UAW-represented workers went on strike at plants in New York and Michigan on Feb. 26 after the two sides failed to reach an agreement on a new contract. Detroit-based American Axle has said it must cut wages and benefits it says run three times higher than those of its competitors.

The supplier, which depends on General Motors Corp GM.N for about 80 percent of sales, inherited the terms of its now-expired UAW contract when it was spun off from the automaker in 1994.

Bargaining teams have been negotiating almost daily since April 9, when contract talks resumed after a one-month delay while the two sides sparred over financial details.

The strike has forced GM to at least partly idle about 30 plants in North America due to parts shortages for production of its full-size pickup trucks, like the Chevrolet Silverado.

GM said this week the strike has cost the production of about 230,000 vehicles since it began and $800 million in lost earnings in the first quarter alone.

But in recent weeks, several developments have combined to undercut the position of the union, analysts have said.

American Axle has doubled the output of an axle plant in Guanajuato, Mexico to about 6,000 axles per day, with the additional output being shipped to GM, the company has said.

In addition, GM has cut its planned production of trucks and SUVs in response to a sharper-than-expected decline in demand for those larger and pricier vehicles in the face of record-high U.S. gasoline prices and weak consumer confidence.

Analysts have said that a deal to cut union wages could boost American Axle's profitability, even amid a slump in demand for the trucks and SUVs it supplies.

Lehman Brothers analyst Brian Johnson said it would be positive for American Axle investors if the company succeeded in eliminating a master contract with the UAW and replacing it with individual contracts for U.S. plants that remain open.

American Axle workers outside the company's flagship plant in Detroit said they were frustrated about the direction of the talks and the lack of updates from negotiators.

Todd Abdullah, a 12-year Axle veteran, said workers could not make ends meet on the reduced wages being reported. "If they cut wages and close plants, who can afford to buy trucks?" he said. "It won't be sufficient for us to survive."

On a nearby picket line American Axle worker Eric Anderson, 41, said the deal as described could face a difficult ratification vote. "Honestly, I don't think we will accept such a package," he said. (Additional reporting by Soyoung Kim in Detroit; Editing by Gerald E. McCormick and Braden Reddall)