GM Gives Supplier American Axle $200 Million to Help End Strike

The work-stoppage has adversely affected the GM North America division's earnings by $800 million. It has also caused the automaker to reduce car production, and has lowered its liquidity, according to a 10-Q filing with the Securities and Exchange Commission.

The work-stoppage is a part of larger problems at GM. In the first quarter, the company said it lost $3.3 billion.

The Detroit-based firm said it provided American Axle with "upfront financial support capped at $200 million" to fund employee buyouts, early retirements, and buydowns to end the work stoppage. American Axle's main customer is GM.

In the filing, the automaker said the work stoppage has negatively impacted the company's liquidity by $2.1 billion in the first three months of the year. Available liquidity was down $3.4 billion during the period, with $23.9 billion on March 31, 2008, from $27.3 billion as of December 31, 2007.

"Workforce disputes that result in work stoppages (such as those at American Axle) or slowdowns at these suppliers could also have a material adverse effect on their ability to continue meeting our needs," the company said.

Although the stoppage has resulted in a loss of about 100,000 production units for the first quarter, idling 30 plants, the high inventory at GM dealers means the company has been able to meet customer demand.

"Should these work stoppages continue for an extended period and we are unable to procure the necessary parts from other sources, in the case of American Axle, we would be materially adversely impacted," GM said.

GM expects that once the strike is over the lost production will not be fully recovered due to the state of the U.S. economy and a customer shift away from demand of trucks and SUVs.