American Axle Offers Buy-Outs to Buffalo Workers

Drivetrain supplier continues to pull back from light-truck market

August 14, 2007 — American Axle & Manufacturing Holdings Inc. reports it is offering a "voluntary separation program" to the hourly workers at its Buffalo Gear, Axle & Linkage plant, Buffalo, NY. The workers are represented by the United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), and the news seems to confirm part of a UAW allegation last April that American Axle was set to close the plant.

The company has not stated a timetable for closing the plant.

It is the second time in 12 months that American Axle has initiated a voluntary program to downsize its workforce. In October 2006, it offered buy-outs or early retirements to workers at its six plants in Michigan and New York, resulting in almost 1,500 separations by January 2007.

The new offer is due to come available to workers in September. Detroit-based American Axle states the plan is related to its announcement in January that it plans to idle part of its U.S. production capacity serving the mid-sized light truck market. The Buffalo plant produces drivetrain components for pick-ups and SUVS, mostly for General Motors Corp. vehicles.

American Axle also has plants in nearby Cheektowaga and Tonawanda, NY.

Officially, American Axle's Buffalo Separation Program offers several buy-out options to 650 workers, including:
-- A monthly payment for workers eligible to reach retirement within four years;
-- A $50,000 buy-out to retirement-eligible associates;
-- A $70,000 buy-out to workers with 10 years or less seniority;
-- A $100,000 buy-out to workers with 10 years or more seniority;
-- An early-retirement program for workers with greater than or equal to 10 years of service, and who are 50-65 years old.

American Axle states that workers who accept retirement will retain all vested pension and other post-retirement benefits. Workers who accept a buy-out will retain vested pension benefits, but forfeit other post-retirement benefits.

The company designs and manufactures driveline and drivetrain systems, chassis systems, and metal-formed products for cars, light trucks, and SUVs. It says it expects to incur special charges of up to $85 million for the Buffalo Separation Program, and it withdrew its 2007 earnings and cash-flow guidance as a result.

In an online forum of questions for UAW leadership April 12, union president Ron Gettelfinger revealed American Axle is preparing to close the Buffalo plant, but added that "we are in negotiations in an attempt to have new work brought into the plant."

He continued: "We recognize this is a difficult challenge, but we are not giving up on this effort." AA&M declined comment then.

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