American Axle and Manufacturing Holdings Inc. said on May 28 it will cut its U.S. hourly work force by 2,000, or about 55%, as a result of a new contract ratified last week by the United Auto Workers union, according to an Associated Press report.
The contract allows the company to close three plants and cuts wages for its UAW-represented work force and provides cash payments, or buydowns as well as early retirement for workers who want to leave. Chief Executive Dick Dauch said the average buydown payment to range from $90,000 to $95,000 per worker, paid out in three installments. The maximum payment would be $105,000.
The company would cut some some salaried workers as well even as it adds some workers at nonunion North American locations.
The company said its new labor contract would reduce its costs for unionized U.S. factory workers by 50% according to a Reuters report. The annual savings would be $300 million from the four-year contract with the United Auto Workers union. Labor costs would be reduced from $73 to between $30 and $45, according to Rueters.