March 28, 2008 / 2:50 PM / 11 years ago

GM to idle Detroit plant due to AXL strike

DETROIT (Reuters) - General Motors Corp (GM.N) plans to shut down a Detroit assembly plant on Monday because of parts shortages caused by a strike against a key supplier that have now idled almost half of GM’s factory work force in North America.

GM employees at the GM Oshawa, Ontario, Assembly Plant, June 19, 2007. REUTERS/J.P. Moczulski

The planned shutdown of the Detroit-Hamtramck assembly plant takes the number of GM plants partially or completely idled by the month-long strike at American Axle & Manufacturing Holdings Inc (AXL.N) to 30, GM spokesman Tom Wickham said on Friday.

The plant, which makes the Cadillac DTS and Buick Lucerne sedans, will be the first car plant to be idled by the walkout at American Axle. Other idled assembly plants make trucks and SUVs such as the Chevrolet Silverado and the Hummer H3.

Wickham said GM would completely shut down the Detroit-Hamtramck plant although some workers would stay on for maintenance and repair. There is no immediate plan to shut down additional plants, Wickham said.

The Detroit plant employs about 1,850 hourly workers represented by the United Auto Workers union. In all, nearly half of its roughly 80,000 hourly workers in North America have been affected.

GM has idled facilities and laid off workers since the strike against American Axle began on February 26. American Axle, which was spun off from GM in 1994, is the exclusive supplier of axles and related components for GM’s light truck line.

Joe Langley, an analyst at CSM worldwide, said without a settlement, GM’s lost production would amount to nearly 160,000 vehicles by mid-April and 270,000 vehicles by the end of April.

GM’s Lordstown, Ohio plant, which makes the Chevrolet Cobalt and Cadillac DTS sedans faces shutdown by the end of next week due to shortages of a brake component, Langley said.

That closure could be followed by moves to idle GM truck plants in Arlington, Texas, and Shreveport, Louisiana, absent a breakthrough in the supplier strike, he said.

Analysts have said GM has the ability to weather a temporary loss of production as it runs down inventory, but they have warned that a prolonged strike would further pressure the embattled automaker’s earnings.

The U.S. auto industry is grappling with higher gasoline prices, sagging consumer confidence and tightening credit.

Detroit-based American Axle has demanded steep wage cuts and threatened to close all five of its U.S. plants if it does not get them. The UAW, which represents some 3,650 striking workers, has rejected those demands.

American Axle has said its wages and benefits run to more than $70 per hour, about three times higher than competitors.

Talks aimed at breaking the impasse between American Axle and the union have been sporadic over the past weeks after intensive talks between the two sides broke off on March 11.

UAW spokesman Roger Kerson declined to comment on the talks.

American Axle spokeswoman Renee Rogers said the two sides had met on Thursday but said the full union bargaining team had not been represented. No talks were scheduled for Friday.

“We’ve reached an understanding on some issues,” she said, adding that issues such as buyouts and early retirement incentives that could be offered to UAW-represented workers remain unresolved.

“We need to come to the table to get an understanding on the economic issues,” she said.

Shares in GM closed down 3 percent at $18.67 on Friday, while American Axle fell almost 2 percent to $20.64.

Reporting by Soyoung Kim and Kevin Krolicki; editing by Gunna Dickson

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