DETROIT, July 26 (UPI) -- American Axle & Manufacturing Inc. says it plans to lay off 2,500 employees and eliminate 70 percent of its U.S. manufacturing capacity.

The company announced the moves Friday as it tries to cope with a $644 million second-quarter loss and the effects of a three-month strike by the United Auto Workers union, the Detroit Free Press reported Saturday.

Many of the lay-offs will come from workers who went on strike. More than 2,000 UAW-represented workers accepted buyouts or retirements as part of the package negotiated to settle the work stoppage.

The strike came just as the kinds of trucks and sports utility vehicles American Axle's parts are used for have become unpopular. Its main customers, Chrysler LLC and General Motors Corp. (NYSE:GM), have seen sales of large vehicles fall by 51 percent while the credit crunch is making it harder for consumers to obtain financing for new vehicles, the Free Press reported.