After a generous offer of $218 million from General Motors (GM), United Auto Workers (UAW) are now urging the workers at American Axle & Manufacturing Holdings Inc. to give their vote of confidence to the deal that has been put forth by American Axle. This deal is aimed at ending the three-months old strike and resume operations at the plant. However, the deal has left these workers concerned and quite bitter towards the management, as the deal proposes a 40% cut in the workers’ wages.

About 3,650 UAW-represented workers that includes almost 1,900 in Detroit will be voting in or against the favor of the American Axle four-year old contract. This contract aims at slashing hourly wages to between $10 and $26 and will also be offering $105,000 in a span of three years, for those workers who agree to the deal and remain with the plant. American Axle will also be offering buyouts worth $140,000 for workers who leave the payroll.

According to the American Axle, the decision to cut hourly wages is a necessary one, as it needs to stay in competition with the other suppliers. For instance, Dana Holding Corp has showed the positive effects of incredibly lower labor costs as it was able to recover even from a bankruptcy with this strategy

Most of the workers at American Axle feel that this is a no-win situation, but still they are considering the options in front of them, as they do not have much to go on. Ron Gettelfinger (President, UAW) tried to pacify the disgruntled worker and mentioned that the negotiation team had no option but to accept the drastic cuts in the hourly wages.

According to the Agreement:

• Hourly wage rates to be cut to a range of $10 to $26.
• Wages at the flagship Detroit plant would range between $14.35 and $26 per hour.
•  American Axle will offer payments of up to $105,000 over three years in exchange for lower wages.
• American Axle will offer buyouts of up to $140,000 for employees who leave the payroll.
• The voluntary buyout program will be offered 14 days after contract ratification and would include 45 days for workers to consider their options.
• Workers who opt for the buyout will leave American Axle by Feb. 1, 2009.
• New production hires to start at wages of $11.50 per hour, skilled trades workers to start at $22.00 per hour.
• A signing bonus of $5,000 to be paid to each worker following ratification.
•  A forging plant in Detroit would close within six months, while another forging plant in Tonawanda, N.Y., would be shut down between six months and a year after ratification.
•  American Axle would invest $170 million to $200 million in remaining U.S. Facilities.
•  The new contract, if ratified, will run until Feb. 25, 2012.
•  Worker contributions to health insurance would increase 3 percent annually starting in 2010; retiree health-care benefits would be unchanged.
•  Supplemental unemployment benefits, a form of wages paid to workers who are laid off in addition to public unemployment benefits, would be capped at $18 million for the company as a whole with funding provided by GM.

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