GM stuck in middle of strike at Axle

DETROIT -- When General Motors Corp. and the United Auto Workers signed a new four-year contract last year, both sides lauded it as historic collaboration that cut labor costs to save the U.S. auto industry from ruin.

Although many thought it ended the threat of union unrest, the acrimony it avoided is now showing up in a six-week-old dispute between the UAW and a key GM parts supplier -- a spat threatening to hit GM's hot-selling products at a time the world's largest automaker can least afford it.

About 3,600 UAW workers at five American Axle and Manufacturing Holdings Inc. plants in Michigan and New York left their jobs Feb. 26 in protest of the company's quest for deep wage and benefit cuts. The resulting parts shortage has affected 29 GM factories and more than 39,000 workers. It also has curbed work at a Hummer plant run by AM General LLC, and it has hit other parts makers in the U.S. and Canada.

On Thursday evening the dispute escalated when American Axle rejected the UAW's latest wage proposal. A company statement said if the UAW "continues to refuse to make realistic economic proposals, AAM will be forced to consider closing these facilities."

Earlier in the day, the union gave five-day strike notices to GM at three Michigan factories.

"It just seems to be spreading," said Gary Chaison, a labor specialist at Clark University in Worcester, Mass. "We're heading into some very difficult times for the UAW and the American auto industry."

Chaison and some industry analysts believe the union's strike threats at GM are a way of pulling the automaker into the American Axle dispute. GM accounts for 80 percent of American Axle's business -- mostly axles, drive shafts and stabilizer bars for large trucks and sport utility vehicles.

So far, the strike hasn't affected GM much because truck-based vehicles aren't selling. American Axle also makes brake parts for GM cars, and analysts and union leaders have said shortages of those could cut production of the Chevrolet Cobalt small car and the mid-sized Chevrolet Malibu in a few weeks.

But GM could be hurt even sooner if the UAW goes through with threatened strikes over local contract issues at the three plants.