May 19 (Bloomberg) -- American Axle & Manufacturing Holdings Inc. workers started voting today on a proposed contract to end the 12-week strike that has slowed output at General Motors Corp., the partsmaker's biggest customer.

The accord reached May 16 with the United Auto Workers calls for wage cuts and buyouts at five American Axle plants in New York and Michigan. Today's balloting covers facilities in Detroit and New York, and a factory in Three Rivers, Michigan, according to a UAW statement and Web site. A union official said voting should be completed this week.

Approval would let American Axle resume operations at the five factories where workers went on strike Feb. 26. GM has stopped or pared production at as many as 30 North American plants as its flow of parts dried up and has said it lost $800 million in the first quarter because of the walkout.

``While details are sparse at this point, it appears that labor savings are significant,'' Brett Hoselton, a KeyBanc Capital Markets analyst based in Cleveland, wrote in a note to investors. He rates Detroit-based American Axle shares ``buy.''

American Axle fell $1.13, or 5 percent, to $21.42 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest daily percentage slide this month. GM gained 19 cents to $20.87. American Axle has declined 6.7 percent since the strike began and GM has dropped 14 percent.

The biggest impediment to American Axle reaching a 12-month price target of $31 a share is a drop in North American vehicle production, particularly the GM pickup trucks and sport-utility vehicles that the supplier makes parts for, Hoselton wrote.

Declining Demand

The strike ``might have ended, but declining consumer demand for full-size trucks likely has not,'' Joseph Amaturo, an analyst at Buckingham Research Group in New York wrote in a note today. ``We would urge investors to use any strength in GM shares in response to the AXL/UAW strike settlement as an opportunity to reduce positions.'' He rates GM stock ``underperform.''

Ratification votes should be done this week, Adrian King, president of UAW Local 235, which represents some American Axle workers in Detroit, said yesterday. The strike includes about 3,650 UAW members, including 2,200 in Detroit.

Some American Axle workers chanted ``vote no'' yesterday after a briefing on the contract in Detroit by UAW leaders including President Ronald Gettelfinger.

``It is not a good agreement, but at this juncture it is the best we can do,'' Gettelfinger said today on Detroit radio station WJR.

Lower Wages, Buyouts

Under the agreement, hourly wages would be cut as much as $10.39 for some jobs, pushing pay to a range of $10 to $26, according to a contract proposal handed out at the UAW meeting. American Axle had said it wanted to cut total hourly compensation, including benefits, to $20 to $30 from $73.48 to keep its U.S. operations competitive.

Buyouts of $140,000 would be offered to workers with 10 years or more of experience, according to the proposal. American Axle would pay a maximum of $105,000 over three years to ease workers into lower salaries, and those with seniority would be offered early retirement.

There would be a $5,000 signing bonus, and workers with fewer than 10 years' experience but more than one would get $85,000 to quit. The buyout program would begin 14 days after the contract is ratified and would have a grace period of 45 days for workers to make a decision.

The agreement includes closing a forge plant in Tonawanda, New York, and a forge factory in Detroit, UAW member Michael Nowak, 65, said after exiting yesterday's Detroit meeting, where union leaders discussed the shutdowns.

American Axle would invest as much as $200 million in remaining U.S. factories, according to the proposal.

GM Aid

King, the UAW local president, said GM agreed to put up $218 million, an increase from the $200 million announced May 8, to help fund American Axle's offer of early retirement, buyouts and supplemental benefits.

American Axle spokeswoman Renee Rogers declined to comment on the agreement, saying the company would wait to see if it's ratified. GM spokeswoman Dan Flores declined to comment on whether the automaker increased its financial aid.

GM accounted for about 78 percent of American Axle's 2007 revenue. The partsmaker was formed by private-equity investors in 1994 from unprofitable GM plants and went public in 1999.

``I would take the buyout if it passes,'' said Tim Langan, 48, a skilled tradesman who is a member of the Local 235. ``Pay the bills and get out.''

The voting that started today includes Local 262 at a Detroit forge, Local 2093 in Three Rivers and Locals 424 and 846 at the New York factories, according to a UAW statement, a local Web site and Scott Davis, area director for the union's Region 9. Workers at Local 235 in Detroit will begin voting at 3 a.m. on May 22, the UAW said in the e-mailed statement.

To contact the reporter on this story: Alex Ortolani in Detroit at aortolani1bloomberg.net

Last Updated: May 19, 2008 16:24 EDT