American Axle announces cuts of half its hourly work force

DETROIT (AP) — American Axle and Manufacturing Holdings Inc. said Wednesday it will cut more than half of its U.S. hourly work force, or 2,000 jobs, through early retirement and buyout offers, plant closures and layoffs.

The moves were made possible by a new contract ratified last week by the United Auto Workers union that came after a nearly three-month strike against the auto parts maker.

The company said its total hourly labor costs would drop to between $30 and $45 from $73.48 under the old contract. The cost will vary by factory because they have different wage and benefit costs.

About 3,650 UAW workers went on strike against the company on Feb. 26, but ratified a contract with deep concessions on Thursday. The bitter strike crippled General Motors Corp.’s production of pickup trucks and big sport utility vehicles, and it took a contribution of $215 million from the automaker to end a stalemate between the union and American Axle.

Chief Financial Officer Mike Simonte said the strike will cost American Axle $125 million to $130 million in lost profits and $370 million in sales this year. But it expects to save $300 million per year with lower labor costs from the new contract.

Simonte said most of the job cuts will come through buyout and early retirement offers, although there will be some involuntary layoffs.

The company plans to close its forge operations in Detroit and Tonawanda, N.Y., and it will idle parts of two other plants in Detroit and Three Rivers, Mich., Simonte said.

He said idling is due to declining demand for the trucks and truck-based sport utility vehicles for which American Axle provides parts. American Axle expects a 30 percent reduction in light truck production by its customers this year. The company gets about 80 percent of its business from GM.

“Unfortunately because of the rundown in demand ... we have too many associates at these facilities,” Simonte said.

American Axle plans to move some of the business from the plants to lower-cost subsidiaries in Michigan and Ohio, and to operations in Mexico, he said.