American Axle shares fall as workers begin to vote

United Auto Workers union members at two Detroit-area plants began casting ballots Monday. But voting at a large Detroit union local won't be done until Thursday night.

About 3,600 workers have been on strike since Feb. 26, severely curtailing production of General Motors Corp.'s pickup trucks and full-size sport utility vehicles.

The four-year agreement, which includes 34 percent pay cuts, does give workers a $5,000 signing bonus, lump-sum cost of living adjustments and a variety of options to take money and leave the company. It also would close the company's Detroit and Tonawanda, N.Y., forge operations.

GM also will contribute an additional $18 million on top of the $200 million it had already agreed to spend to help end the strike.

Analysts said that while the savings in the contract are substantial, American Axle still suffers from its heavy dependance on North American light truck demand.

Baird's David Leiker backed his "Neutral" rating for American Axle, saying that while he expects the auto supplier's shares to rise when the strike ends, falling SUV and pickup truck production will continue to hurt its sales.

Leiker said it appears that the net cost savings are likely in line with what he expected, while the cash cost will likely fall short of predictions.

"In short, gross labor cost savings are likely higher than we had expected, though GM's unexpected cash contribution implies it will take a larger share of the realized savings," Leiker wrote in a note to investors. "GM is paying roughly half the cost and we would expect them to take roughly half the savings."

Deutsche Bank's Rod Lache backed his "Hold" rating for the company, but boosted his price target by $4 to $24, citing cost savings from the new agreement. He also voiced concerns about slumping SUV and truck sales.