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American Axle factory in Buffalo to be idled 734-job plant to keep only skeleton staff

The chief executive of American Axle & Manufacturing confirmed plans to idle the company's 734-job Buffalo plant -- formerly the city's largest source of factory jobs -- during a conference call with industry analysts Friday.

The shutdown plan had previously been discussed with union officials but not confirmed publicly.

Chief Executive Richard Dauch identified the Buffalo plant as the only site to be idled in 2008, as the Detroit-based auto parts maker tries to reduce its glut of unused production capacity.

Idling means production will cease but the plant will, technically, remain open with a skeleton staff to maintain the facility. The plant has 647 hourly workers and 87 salaried workers.

United Auto Workers officials said they have been told all operations will wind down at the end of this year, with a final shutdown coming at the expiration of the union contract Feb. 25, 2008.

The union will negotiate severance for the plant's remaining hourly workers next month.

"We're going to try to get the best package we can," said George Jemiolo, chairman of UAW Local 424. "As far as I'm concerned, these are the people who built American Axle."

The East Delavan Avenue plant mainly produces axle modules for the General Motors Colorado-Canyon family of small pickups and SUVs, which is nearing the end of its product cycle.

Sales of the vehicles are falling faster than for other GM light trucks, Dauch said.

However, global sales prospects are surging for American Axle, he said. The components maker has received $400 million in new orders over the past year for work to be completed over the next five years.

Most of the work will be performed abroad -- mirroring a global shift throughout the parts-making sector.

"Seventy-five percent of new business backlog is sourced to non-U.S. facilities," Dauch said during the conference call.

The new orders will go to plants in Guanajuato, Mexico; Changshu, China; Araucaria, Brazil; and Olawa, Poland, he said. The business may also lead to construction of other non-U.S. plants.

In Western New York, American Axle has 1,236 production jobs. In addition to the Buffalo plant, the Town of Tonawanda plant has 472 hourly workers, and Cheektowaga has 117.

The company said that costs at U.S. plants remain high, despite a buyout that erased 1,500 production jobs nationally, about 600 of them from the East Delavan plant.

One worker who spent 44 years in the plant and took the $50,000 buyout in January, said the company has been building plants abroad for years and transferring the jobs.

"If you keep doing that, in America we're going to be working for poverty wages," said the man, who spoke on condition of anonymity for fear of some form of retribution.

The company confirmed that its foreign operations are more profitable than its domestic plants.

"Our profits are coming from overseas," Chief Financial Officer Michael Simonte said during the conference call.

The boom in "crossover" vehicles with all-wheel drive is pushing demand for the company's axle sets globally, officials said. Much of the new work is from ex-parent GM for vehicles to be sold in North America and elsewhere.

Built in the 1920s, the East Delavan Avenue plant employed about 3,700 in its heyday.

John Meczynski, a 30-year production worker, said the plant was producting 406 axles per hour at one time.

"It was busy," the 52-year-old Meczynski said. But lately "the place has been getting emptier and emptier as machines are shipped to other plants."

As the production jobs are phased out, Meczynski predicted the economic impact will be felt beyond the plant's employees.

"We're all affected by it, even people who don't work there," he said, noting that businesses that supply the plant and businesses that are frequented by plant workers will feel the pinch.

"The money that they spend isn't going to be there anymore," he said.

Buffalo Mayor Byron W. Brown said in a statement that he has reached out to American Axle executives in an effort to find some way to help keep the plant producing, but his offer has not been taken up.

He said the demise of another manufacturing plant is not unique to Buffalo.

"This announcement is not a reflection simply on doing business in Buffalo; it is a graphic reminder of the lure of overseas cheap labor and its impact on communities across the United States," Brown said in the release.

The company's remarks about the plant came as it discussed its financial performance for the second quarter.

Sales in the quarter rose 5 percent from a year ago to $916.5 million. Profits grew 70 percent to $34 million.


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