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Strike Sends American Axle to Loss

TSC Staff

American Axle & Manufacturing Holdings AXL said it had a first-quarter loss as the company dealt with a strike by the United Auto Workers over a labor agreement.

The auto components and systems maker said it swung to a first-quarter loss of $27 million, or 52 cents a share, from a profit of $15.7 million, or 30 cents a share, in the year-ago period. Sales fell to $587.6 million in the first quarter from $802.2 million in the same period last year.

American Axle said the UAW strike in February, where about 3,650 employees represented by the union went on strike at plants in New York and Michigan, forced a reduction in sales and operating income by $132.6 million and $45.8 million, respectively. The Thomson Financial consensus estimates were for a loss of a penny a share on revenue of $664 million.

Earlier this week, American Axle said that the latest proposal aimed at ending the two-month-old strike was "not market competitive" and that it may close striking production plants if the UAW workers do not accept pay and benefit cuts.

"While it would be tragic to dismantle AAM's original U.S. manufacturing base, AAM will be forced to consider additional restructuring and capacity rationalization actions if the International UAW refuses to accept the structural and permanent changes needed to achieve market cost competitiveness at these facilities," CEO Richard Dauch in the earnings release.

The company said production volumes for the full-size truck and SUV programs for General Motors GM and Chrysler were down approximately 31% in the quarter as compared to the prior year.

Production volumes for its mid-sized truck and SUV programs were down approximately 43%. Non-GM sales represented 26% of total sales the quarter, American Axle said.

Shares of American Axle fell 3.9% to $20.98. Among other auto-parts makers, Lear LEA was off 3.1%, while Visteon VC advanced 2.8%. ArvinMeritor ARM tacked on 1%, and Dana Holding DAN rose 2.9%.