DETROIT, - American Axle & Manufacturing Holdings Inc (AXL.N: Quote, Profile, Research) said on Wednesday its new labor contract would reduce its costs for unionized U.S. factory workers by 50 percent, and it expects to cut more than 2,000 jobs.
The auto parts supplier said it expects annual savings of nearly $300 million from the four-year contract with the United Auto Workers union. The pact was ratified earlier this month, ending a three-month strike at U.S. unionized plants in Michigan and New York.
Chief Executive Dick Dauch said American Axle expects the new contract to cut its average UAW-represented hourly labor cost from near $73 to a range between $30 and $45. The contract allows the company to close three plants and cuts wages for its UAW-represented work force. It also sets out cash payments, or buydowns, to soften the blow of wage cuts, and outlines buyouts and early retirement for workers who want to leave.
The company expects to cut about 2,000 hourly UAW workers over the next year, and some salaried workers. It expects to add some workers at nonunion North American locations.
American Axle expects a final tally on buyouts and retirements by the middle of the third quarter. The 3,650 union workers at its plants that were striking are eligible for a range of retirements, buyouts or buydowns.
American Axle expects the average buydown payment to range from $90,000 to $95,000 per worker, paid out in three installments, Dauch said. The maximum payment would be $105,000.
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