GM To Lose $1.8B In 2Q Pretax From American Axle Strike

May 23, 2008 2:13 p.m. EST

Detroit, MI (AHN) - General Motors Corp. on Friday said the recently concluded three-month long strike at the plants of its autopart supplier would hurt its quarterly earnings.

The strike by United Workers union members American Axle & Manufacturing Holdings Inc. will cost GM about $1.8 billion before taxes in the second quarter.

GM had revealed earlier that the strike would cause in the loss of 100,000 production units during the first quarter, which had an estimated impact on earnings before tax of approximately $800 million

On Friday, the firm, a component of the Dow Jones Industrial Average, reported that it expects to recover only a certain portion of the lost production in the second quarter.

In a filing with the Securities and Exchange Commission, the company reported that it anticipates to produce 230,000 fewer vehicles during the quarter due to the halt in the production of autoparts supplies.

Last week, the United Auto Workers union reported that it reached a deal with American Axle, who will pay its employees $10 to $26 an hour at plants in Detroit and New York.

The tentative deal ended an 11-week strike by around 3,650 UAW workers, starting from Feb. 26, that had stopped the production at the General Motors Corp. supplier's 30 plants in North America.

Under the agreement, American Axle has decided to pay a maximum of $105,000 over the period of three years to the workers, which will slowly ease them into lower salaries.

GM added that it contributed $215 million to help settle the 11-week dispute between American Axle and the United Auto Workers, which is up from its previous offer of $200 million.

On Friday, the reports said the United Workers union members are going to return to work at U.S. auto parts maker American Axle next week after voting in favor of the deal.

The votes were accounted by 78 percent in favor of a new four-year agreement that contains wage concession. Under the deal, American Axle will pay its employees $10 to $26 an hour at plants in Detroit and New York.

Meanwhile, the firm also added in the filing that it will lose 33,000 production units in the second quarter due to the work stoppages related to the finalizing of local United Auto Workers agreements, which would result in an additional pretax loss of about $200 million.

Shares of the automaker were slipping by 60 cents or 3.3 percent to $17.83, after it closed Thursday at $18.43.