UAW Strikes Auto Supplier American Axle

By Karen Padley and Tom Brown

Talks between the auto parts supplier and the union were set to resume sometime Thursday, according to both sides.

"We're hoping that we can resolve this quickly because it shouldn't be happening," Wendy Thompson, president of the UAW's Local 235, told reporters at a picket line outside an American Axle plant in Hamtramck, Michigan, near Detroit.

American Axle shares were off 84 cents, or 2.2 percent, to $37.17 in early afternoon trading on the New York Stock Exchange.

The strike affects about 6,500 UAW members at plants near Detroit; in Three Rivers, Michigan; and in Buffalo, Tonawanda and Cheektowaga, New York.

American Axle said another 1,000 employees represented by the UAW work at plants where the contracts have not expired. Those five plants, located in Michigan and Ohio, are operating normally, according to spokeswoman Renee Rogers. Earlier, the company had said that 7,500 workers were on strike.

Analysts said the strike could be short-lived and have minimal customer impact.

"While it is always difficult to speculate on the length of an in-process strike, we would anticipate a settlement within a few days," Jon Rogers, an analyst with Wachovia Securities, wrote in a research note.

Sales to GM represented about 82 percent of American Axle's total net sales in the first three quarters of 2003. American Axle makes gears, axles, drivelines and related products,

"Although GM truck facilities will shut down without axles, the good news is that GM had 800,000 trucks in inventory at the end of January 2004, a 120-day supply," wrote Rogers, who rates American Axle shares "outperform."

Merrill Lynch analyst John Casesa, in a research note, estimated that GM's inventory is large enough to endure a two-week strike.

"If the UAW strike at American Axle strike is prolonged, it could have a material negative impact on GM's results in the first quarter of '04," Casesa wrote. "But as has been the case with past strikes, we expect the pressure to be temporary."

He estimated each day of lost production at GM could depress the automaker's earnings per share by as much as 7 cents a day.

General Motors declined to comment on what impact, if any, the strike, might have on its production.

"We hope for a quick resolution of the work stoppage," GM spokesman Tom Wickham said.