Strike pulling as much as $9,000 a week from city

BY ERIC D. LAWRENCE • FREE PRESS STAFF WRITER • April

10, 2008

http://www.freep.com/apps/pbcs.dll/article?AID=/20080410/NEWS02/804100371/1004/NEWS02

American Axle Strike• The effects of the more than six-week-old American Axle strike

are extending beyond the workers and the company's automotive customers: Hamtramck, which counts American Axle as one of its biggest employers, is feeling the squeeze as well.

• Hamtramck officials say the city is losing between $8,000 and $9,000 in income tax each week because of the strike. The city charges an income tax to residents and nonresidents who work at the plant.

• The city's finance director, Nevrus Nazarko, said the situation is dire.

• "We are in a survival mode," Nazarko said, noting that city finances had appeared to be heading in a positive direction before the strike. Just last year, Gov. Jennifer Granholm signed an executive order officially lifting the financial emergency status that had limited local control over city finances since 2000.

By the numbers

• 1% -- Income tax charged to residents

• 0.5% -- Income tax charged to nonresidents

• $19.5 million -- 2007-08 revenue for Hamtramck's general fund

• $2.4 million-$2.5 million -- Total income tax collected by Hamtramck yearly

How to react?• Nazarko and other officials predicted cuts to services, although

Nazarko said it's too early to say how much.• City Councilmen Scott Klein and Shahab Ahmed said the city's

beautification efforts and public safety services could be among the areas affected.

• "It's not anything any one of us are going to want to do," Klein said.• City officials say they have not taken sides in the dispute. American

Axle employs about 1,900 hourly workers locally.• Both sides in the labor dispute said they were sympathetic to the

city's issues. Negotiating teams returned to the bargaining table Wednesday.

• Renee Rogers, a spokeswoman for American Axle, said the company has been supportive of Hamtramck and Detroit. Local operations straddle both cities.

So what?

• Suppose strike lasts 4 weeks $36,000

• This is 1.5% shortfall from $2.4 million income tax.

• Here’s the problem (although this one isn’t too big … yet).

• Most of city’s costs are contractual. Annual, or long-term contracts.

Fixed Costs

• Suppose that 90% of costs are contractual, and there is a 1% revenue shortfall.

• This isn’t 1%/100%.

• It’s 1%/10%. Everything that isn’t contractual must be cut by 10%.

• CAN make a difference!