February 29, 2008 / 4:48 PM / in 10 years

GM idles 3 more plants due to supplier strike

DETROIT (Reuters) - General Motors Corp said on Friday it would idle three more assembly plants because of parts shortages caused by a strike against its supplier American Axle & Manufacturing.

<p>A General Motors employee inspects Chevrolet Impalas on the production line in Oshawa, Canada August 21, 2006. General Motors Corp said on Friday it would idle three more assembly plants because of parts shortages caused by a strike against its supplier American Axle &amp; Manufacturing. REUTERS/J.P. Moczulski</p>

GM said it would idle truck plants in Flint, Michigan; Fort Wayne, Indiana; and Oshawa, Ontario at the end of the second production shift on Friday night.

Taken together the three plants employ about 9,500 workers. GM had already closed a fourth plant in Pontiac, Michigan because of shortages in shipments of axles and related components from Detroit-based American Axle.

The plant shutdowns showed the spreading impact of the strike by the United Auto Workers against American Axle that began this week after contract talks broke down over wages.

Including GM’s Pontiac plant, some 12,500 workers at the No. 1 U.S. automaker devoted to production of its Chevrolet Silverado and GMC Sierra pickup trucks have been laid off because of the strike at the supplier.

Other GM facilities at risk due to their reliance on American Axle parts include plants devoted to SUV production in Arlington, Texas; Janesville, Wisconsin and Silao, Mexico.

GM spokesman Tom Wickham said the automaker was monitoring the situation, but had no immediate planned plant closures.

The GM action corresponded with a parallel labor-related plant closure at smaller rival Chrysler LLC.

Chrysler stopped work at a Windsor, Ontario minivan plant on Friday because of a shortage of parts from TRW Automotive Holdings Corp, the target of a strike by the Canadian Auto Workers union.

Analysts have said a short work stoppage could allow GM to run down inventories of trucks and sport utility vehicles, but have cautioned that a longer disruption could be costly.

About 3,600 UAW-represented workers in Michigan and New York went on strike on Tuesday against American Axle and talks between the two sides have not resumed.

American Axle had stockpiled parts for GM in advance of the strike, and most analysts had projected that it would take a week or so before shortages began to pinch GM.

GM’s pickup truck inventories ballooned in January and the plant shutdowns could give it a chance to reduce those at a time when overall U.S. vehicle sales remain under pressure.

GM had a 152-day supply of the GMC Sierra and a 153-day supply of the Chevy Silverado pickup as of February 1, according to data compiled by the industry journal Automotive News.

By contrast, the overall inventory level for Detroit-based automakers stood at 88 days.

American Axle, which was spun off from GM in 1994, relies on the automaker for about 80 percent of its sales and ranks as the main axle supplier for GM’s large truck and SUV lineup.

American Axle has said it has invested more than $3 billion in its U.S. plants and needs to cut hourly labor costs from nearly $70 per worker to between $20 and $30 to become competitive with rivals led by Dana Corp.

For its part, the UAW says the supplier has repeatedly threatened to move production to Mexico in the absence of sweeping concessions from the union.

The UAW has filed an unfair labor practices charge against the company, charging that it has not bargained in good faith.

The company rejects that claim and has said it is ready to resume contract talks at any time.

American Axle spokeswoman Renee Rogers said no contract talks had been held with the UAW as of Friday afternoon and none were scheduled.

Editing by Tim Dobbyn, Leslie Gevirtz

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