Detroit: General Motors Corp (GM) has had to idle a Michigan based Pontiac truck plant, as a direct result of a strike against parts supplier American Axle and Manufacturing Inc.

The idling plant is the first casualty of the strike by the United Auto Workers (UAW) against American Axle, the issue being wage cuts and benefit costs.

80 per cent of American Axle's sales come from GM. The company supplies axles for the automaker's large truck and SUV product line.

GM's Pontiac, Michigan plant makes the Chevrolet Silverado and GMC Sierra full-size pickup trucks.

According to industry analysts, a short strike at American Axle would allow GM an opportunity for better inventory management, as they would be able to liquidate inventories of unsold trucks and SUVs for the time the plants idle. GM's pickup truck inventory had ballooned in January, and this could well be the chance for the company to shrink those stocks, given the pressure faced by US vehicle sales. However, they caution that a prolonged strike could prove costly.

The UAW struck work shortly after midnight on Tuesday, rejecting demands by American Axle for wage cuts.American Axle is looking to bring down its hourly labour costs from around $70 per worker, to somewhere between $20 - $30. According to reports, this forms its basis to be competitive with rivals such as Dana Corp.

American Axle was part of GM, till it was spun off in 1994. It is still somewhat a captive supplies, with GM accounting for almost 80 percent of its revenue. Chrysler also sources parts from American Axle for its full-size Dodge Ram pickup trucks, as well as for the Durango and Aspen SUVs.

American Axle has said that its five plants in the US which are subject to the strike by the UAW union have not seen a profit in years. In a statement, the company said it's other US and international plants were profitable owing to the lower cost structures at those sites.

The strike has already reached its fourth day, and work stoppage has impacted around 3,600 union workers at American Axle. In its statement, American Axle also denies a charge of unfair labour practices levelled against it by UAW, which claims that American Axle withheld information needed by the union to assess the need a drastically lower wage levels the company is demanding. The company has said that it "honoured its duty to negotiate in good faith," denying that it engaged in unfair labour practices. What the charge effectively does is prevent American Axle from hiring any replacement workers, as if the National Labour Relations Board were to find it guilty of the charge, the company would have to re-hire its striking workers, and pay them back-dated wages according to US laws.

American Axle's statement says that it is seeking lower wage levels in order to be competitive with other US rivals who make axles and related components, chief among whom is Dana Corp, which recently came out of bankruptcy. The company says its hourly wages are around three times higher than what the competition pays in the US.