American Axle sues steel maker

Auto parts supplier American Axle & Manufacturing Holdings Inc. is seeking a court order to get one of its steel suppliers to resume deliveries, saying that cutting off supplies threatens the entire auto supply chain.

Detroit-based American Axle has asked an Oakland County, Mich., Circuit Court judge to order Republic Engineered Products to resume steel shipments. Republic stopped shipments of its custom steel products to American Axle last month, seeking volume commitments and pointing to American Axle's weak financial condition.

A spokesman for Canton, Ohio-based Republic said it expects a ruling on the request Wednesday.

''We're aware of the suit and that it's something we wish we could have worked out privately with our customer and that normally we don't comment on customer issues,'' Republic spokesman Ken Braun said.

American Axle is a principal supplier of General Motors Corp. It makes components crucial to the production of GM trucks and SUVs and was the automaker's 16th largest creditor when it filed for Chapter 11 bankruptcy protection earlier this month, according to court filings.

Automakers have expressed concern that a parts shortage caused by lack of supplies among lower-tier suppliers could lead to widespread disruption of vehicle production. However, GM spokesman Dan Flores said the dispute does not affect GM for the time being because the automaker has already ceased virtually all truck production.

''We are aware of the issue with American Axle and one of its suppliers,'' Flores said. ''We do not foresee any impact on GM production at this time.''

In its request filed earlier this month, American Axle alleged that Republic wrongfully backed out of a four-year contract to supply custom-made steel. According to court documents, Republic sought from American Axle a ''binding schedule'' for deliveries, citing the parts maker's weak financial condition.

American Axle has closed plants and laid off thousands of employees to cope with the decline in automobile production. In March, its auditors issued a so-called going concern warning, raising doubts about its ability to continue operations.

Company representatives at American Axle did not return phone calls seeking comment. Its shares fell 7 cents to close Tuesday at $3.52.

United States Steel Corp. plans to recall about 800 laid-off workers at a plant in Canada this summer, partly to avoid possible severance payments required under a provincial law, a union representative said Monday.

Like other steel companies, U.S. Steel has faced dwindling orders as the global economic crisis shrinks demand for the metal used in everything from cars to office buildings. The company has laid off thousands of workers since last fall as it has ratcheted down production in an effort to match the falling demand.

U.S. Steel said Friday it plans to recall the workers at its plant in Hamilton, Ontario, sometime this summer, according to Rolf Gerstenberger, president of the United Steelworkers' Local 1005.

The move was prompted partly by looming deadlines under Ontario's Employment Standards Act, which would require U.S. Steel to set aside about $15 million for possible severance pay to workers laid off more than 35 weeks, he said.

A U.S. Steel spokeswoman, Erin DiPietro, declined to comment, but said the company was continuing to adjust operations across North America ''to stay in line with customer demand and to adjust our work force as appropriate.''

In May, the Canadian government warned U.S. Steel that it must live up to production commitments at its Ontario plants, formerly owned by Stelco Inc. Industry Minister Tony Clement said plant shutdowns in Hamilton and Nanticoke may have violated commitments U.S. Steel made when it bought the Canadian steel producer in 2007.

The Hamilton plant employed about 1,700 people before some 700 workers elected to retire early and slightly more than 800 were laid off starting in November. Others had planned to retire earlier. The plant currently employs about 115 people, and its blast furnace has been idled since October. It remains unclear when steel making might resume there.

U.S. Steel plans to restart ovens at the plant used to make coke, a fuel used in blast furnaces. ''And we're going to ship it to the Granite City plant,'' said Gerstenberger, referring to a U.S. Steel facility in Illinois.

The company has notified union representatives that it plans to restart the Granite City plant, where more than 2,000 people have been laid off, said Randy Virgin, contract coordinator for local chapters of the United Steelworkers union. But the timing remains unclear, he said.

''It's hard to tell how many (workers) might be brought back,'' Virgin said.

(Steel Talk is a compilation of information from wire services, local companies, trade journals and the Internet.)