Entitlements Will Break a Company, AAM's Dauch Says

Richard Dauch, Outspoken Head of parts supplier American Axle Mfg. & Holdings Inc., says the entitlements enjoyed by generations of U.S. workers must end for the nation to remain globally competitive in manufacturing.

“Eliminate the entitlement mentality that is so pervasive in today's American culture,” Dauch says at The National Summit conference in Detroit.

Dauch, whose company endured an 87-day United Auto Workers union strike last year over the supplier's demands for labor concessions, points to historical industry bargaining agreements with supplemental unemployment pay, the notorious Jobs Bank and automatic cost-of-living increases.

“That sounds all nice and tidy, but it will break a company,” he says of the entitlements, given up recently as the Detroit Three and top suppliers struggle.

The former Chrysler Corp. executive, who took over a handful of unprofitable axle and chassis plants to create AAM in 1994 and build it into a global powerhouse, says he watched entitlements annually raise fully loaded labor costs in the industry by “$10, to $20, to $30, to $40.

“And people were shocked to learn earlier this year of fully loaded labor costs of $70, $80, $90 an hour,” he says.

Analysts say last year's UAW contract lowered AAM's fully loaded labor cost from $73 an hour to between $40 and $45.

AAM Labor Deal Portends Big Savings in Short Order
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