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Scores of small privately owned suppliers are falling victim to the American Axle strike as it nears a fifth week. Many are the very companies that had the foresight in the early 1990s to grab a share of the lucrative truck building business and then became the envy of their competitors by getting a bite of building General Motors Corp.'s hot-selling big trucks and SUVs. But now those same businesses are hurting the most, facing anything from weak first-quarter results to layoffs to the threat of closing altogether. Not only are they being slammed by the walkout staged by the United Auto Workers union that has stymied GM truck production across the United States, but they've lost business in recent years as more Americans shun hefty trucks for more fuel-efficient cars and crossovers. The precise impact is nearly impossible to gauge, since many of the hundreds of suppliers who provide parts to factories affected by the strike are private and below the radar of Wall Street. But analysts who do work for those smaller companies say many of the businesses are struggling. "It used to be that if you won a job on this program, this was the creme de la creme, it was 'happy days are here again,' " Jim Gillette, director of supplier analysis for CSM Worldwide, said of GM's full-size pickup and SUV product lines. "Now, this is kind of a disaster scenario for these companies." 29 GM factories affectedAmerican Axle & Manufacturing Inc. workers at five of the Detroit-based supplier's factories walked off the job Feb. 26 with the company and union deadlocked on issues involving wages and job security. Sources close to the negotiations have said American Axle wants to cut hourly wages for production workers from $28.15 to $14.50 and eliminate 1,000 plant jobs. Talks have been stop-and-go for several weeks. American Axle spokeswoman Renee Rogers said Friday evening that the two sides were engaged in "ongoing discussions" but that she was unaware if there were plans to resume full-fledged negotiations this weekend. The work stoppage has forced GM to halt production at all or part of 29 of its U.S. factories, including assembly, powertrain and stamping plants that employ about 37,000 hourly workers. Several major suppliers, including Lear Corp., have also been forced to make cuts. The production halt cuts deep, in part, because it affects output of some of the most profitable vehicles sold in the United States. Even though sales of big trucks and SUVs have slid, dropping as much as 9 percent last year, the vehicles continue to command high prices relative to cars and smaller SUVs. One west Michigan company, for example, is telling employees not to come to work because of the strike. Since earlier this month, Challenge Manufacturing in Walker has been playing a message on its employee hotline telling workers at one of its factories to stay home unless they're specifically contacted by management. The company, which employs about 600 workers, produces metal-stamped parts. The number of laid-off workers was unclear. Other suppliers feel pinchA platform like the one used for GM's full-sized trucks could easily involve 500 significant suppliers, analysts say. Many of those companies supply parts for other products, which helps mitigate the strike's impact. But some rely heavily on American Axle business. "If you happen to be a supplier where American Axle is a significant client of yours, then this strike would be having a profound impact on you," said Craig Fitzgerald, a supplier expert with consultant Plante & Moran PLC. "This is going to be a very tension-filled period." Fortunately, Fitzgerald said, most suppliers have increasingly begun to diversify their client base in recent years. Fewer companies are reliant on one automaker or product than even a few years ago. He said it's likely only a handful of suppliers are deeply dependant on GM's truck lines for business. But even companies with a varied client base are likely to feel pinched by the Axle strike, especially since it is coming during a rough stretch for the entire U.S. auto industry as overall sales are down. "Many of them have strong enough balance sheets to get through this," Fitzgerald said. "But it's going to be a real performance issue."
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