The company's major customer is General Motors Corp. (NYSE:BGM), which takes about 80 percent of its production, The Detroit Free Press reported. A strike could disrupt GM's operations as well, especially its production of large trucks and sport utility vehicles.

While the United Automobile Workers and the company continued to negotiate Friday, both sides were clearly preparing for a walkout, the Free Press said. A strike could begin as soon as Tuesday, when the current contract expires.

American Axle wants about 3,000 employees to work for lower wages.

The company was stockpiling GM parts, a source told the newspaper. The union was already setting up schedules for picket duty.

"Our bargaining committee is working hard at the bargaining table," said Jimmy Settles, a UAW vice president. "We are continuing to negotiate for an agreement that will help our members, our community and the company."