Pay Cuts Earn Axle CEO Mega-Million-Dollar Bonus

By Paul Eisenstein June 28th, 2008

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The timing couldn't be better - or more ironic. In this Sunday's Dilbert comic strip, you'll find the pointy-haired boss advising his miserable minions they'll be getting no bonuses, but top executives will use the savings to fund a new, motivational film, "The Sound of No Money."

While we'll have to see whether a similar film is in the works at American Axle, the Detroit-based mega-supplier, which just ended a bitter, three-month strike, we can now confirm that CEO Dick Dauch and his top management team will certainly not be singing that tune. Quite the contrary. The Axle board has awarded Dauch with a whopping $8.5 million bonus - double what he got last round - bringing his total compensation to $15.7 million for the year.

The board justified the raise by citing Dauch and other managers for their "accomplishments and commitment during a period of significant change in our industry." The biggest change: American Axle workers caved in on the company's demand for massive pay cuts, though they did get short-term bonuses to help them prepare for the new reality of earning half as much as they did before. Before we're accused of bias, we need point out that workers at American Axle - which was once a part of General Motors - were previously taking home salaries and benefits significantly higher than what employees at key competitors were making.

Even so, Bill Alford Jr., the local United Auto Workers Union official who led Axle workers on the pickup line, was quoted condemning the big-dollar payoffs for executives, whom he accused of profiting "in the middle of everyone else's misery."

Tags: American Axle, auto suppliers, Dick Dauch, general motors, UAW

Posted in : Industry

American Axle Deal a Bitter Pill

By Paul Eisenstein May 19th, 2008

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It’s going to take a lot more than sugar to sweeten the deal that American Axle workers are being asked to swallow. The proposed settlement that ends a nearly three-month strike at the huge partsmaker will require workers to slash wages by as much as $10 an hour – though they’ll also get “buy-downs” of up to $105,000 to help absorb the hit their facing to their weekly paychecks.

The strike, targeting one of Detroit’s biggest auto suppliers, was among the most bitter labor disputes to hit the industry in a decade, and it not only closed down American Axle, but led to the closure of 34 factories run by its largest customer, General Motors.

Workers interviewed after learning of the agreement’s details used words like “nightmare” to describe the situation their facing. But company officials insist that without sharp cuts, they’d face a nightmare of their own, having to either export jobs or close their operations down.

At some plants, workers will now make as little as $10 an hour, though skilled tradesmen will earn as much as $26. Aided by an infusion of cash from GM – which once owned what became American Axle – the supplier is encouraging workers to accept the giveback agreement with several large carrots. There are buyouts of up to $140,000, early retirement packages of $55,000, and for those who remain on the job, they stand to receive up to $105,000 over a three-year period. That would offset the reduction in wages.

Even with the deal, American Axle will still close down two of its U.S. plants: one in Detroit, the other in Tonawanda, New York.

Initial reaction was angry, though after 12 weeks off the job, it appears most Axle employees simply want the confrontation to end. A vote on the agreement, originally scheduled for Monday, has been postponed until Thursday.

Reaction was generally more positive outside labor circles. “On the surface the savings appear to be very large,” noted Rod Lache, of Deutsche Bank. In a brief on the deal, Lache suggested American Axle will eliminate about 1,000 jobs, or roughly 30 percent of its current workforce, while reducing costs about $230 million, or about $3.30 in earnings per share. Even so, he cautioned that the supplier faces some serious “headwinds.” It makes much of its money producing axles and other components for large pickups and SUVs, such as the Chevrolet Silverado and Cadillac Escalade. With sales slumping in both those segments, Axle will need all the savings it can get.

Tags: American Axle, auto parts, auto suppliers, car parts, general motors, GM

Posted in : Industry

American Axle Settles, GM Malibu Plant, Too

By Paul Eisenstein May 17th, 2008

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The nearly 12-week-long walkout at American Axle has ended and, with it, one of the most bitter labor confrontations to hit the U.S. auto industry in years. There's no word yet when all employees will be back on the job, nor how soon General Motors will be able to get enough parts to reopen dozens of plants shuttered because of shortages. The automaker did recently reopen five of 34 affected plants, however, signaling the likelihood of a settlement.

Meanwhile, workers at a GM assembly plant, in suburban Lansing, Michigan, have reached a settlement that should have them back on the job shortly. That's good news, as the line produces GM's popular Chevrolet Malibu sedan. The settlement, at the Delta Township plant, comes just days after the automaker announced it would cut off medical coverage and life insurance policies covering picketing hourly workers.

Tags: American Axle, Chevrolet, Chevrolet Malibu, Chevy, general motors, GM

Posted in : Industry

Is American Axle Strike Nearing an End?

By Paul Eisenstein May 13th, 2008

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Don’t hold your breath. Not yet. There’ve simply been too many setbacks to believe that the nearly three-month strike at American Axle is finally over. Nonetheless, there are finally reasons to believe that there really is some progress being made, according to various industry sources.

You wouldn’t have known, just a couple days ago, when flames started shooting out of the mouth of the mouth of United Auto Workers Union President Ron Gettelfinger. With Axle threatening to close most of the plants where workers have been striking – even after a settlement – the labor boss was visibly and, many would say, justifiably angry.

Yet, at this point, everyone involved seems to be desperate to dig out of this mess, and by late Monday, both sides were struggling to get back on track. Certainly, it helped having General Motors putting pressure on both labor and management. As of late last week, 34 of the automaker’s plants were at least partially idled due to parts shortages – GM accounts for a whopping 80 percent of American Axle’s business.

If it’s any indication that the end of the 11-week walkout is at hand, GM has just reopened five of those plants, though it’s not saying how it has apparently made an end-run around the parts shortage. The automaker did note that as of the end of April, the American Axle walkout had cost it a hefty 230,000 units of lost production, most of them large SUVs and pickups - like the Chevrolet Silverado, shown above. The only consolation is that in the current, weak economic environment, with new car sales sliding by the day, the actual impact on sales has only been marginal.

Tags: American Axle, general motors, GM, labor, UAW, United Auto Workers

Posted in : Industry