American Axle to grow outside U.S.

American Axle & Manufacturing Holdings Inc. plans to slash its U.S. investment and pursue growth overseas as part of a recasting of the company, according to internal documents obtained by Automotive News.

The Detroit driveline company plans to spend $73.0 million on its U.S. operations this year to support new products and contracts, but just $30.3 million next year.

By contrast, its international investment is expected to reach $162.3 million this year and $189.7 million in 2009.

Foreign flip-flop

Facing headwinds from weak truck sales here, American Axle forecasts international revenues will top U.S. revenues for the first time in 2010. By 2013, international revenues will total $2.64 billion — more than double projected U.S. revenues of $1.2 billion, the documents show.

CEO Richard E. Dauch is placing his bets beyond U.S. borders. Between this year and 2013, the documents show, he plans to spend $1.04 billion outside the United States. That compares with $219.5 million for American Axle's U.S. plants.

"Our U.S. spending reflects the flat U.S. growth versus the rapidly growing international market," said Renee Rogers, an American Axle spokeswoman. She said the figures obtained by Automotive News are part of a "living document" that changes with customer production schedules and other factors.

A former American Axle executive says, "If you want to know where GM will be locating new assembly plants, watch American Axle."

The documents show two new plants each are planned for Michigan and for India and one each for Thailand, Mexico, Poland and Colombia. Expansions are planned for the company's Three Rivers, Mich., plant, and Guanajuato, Mexico, complex and for plants in Brazil and China.

Today, American Axle is a largely U.S. company. In 2007, U.S. sales accounted for $2.07 billion out of total revenues of $3.25 billion. Net profits were $37.0 million.

American Axle has about 5,000 U.S. employees and 3,758 workers elsewhere. Under the company's growth plan, those numbers would flip-flop by 2013. The U.S. head count would drop to 3,478, and the foreign count would jump to 8,243.

With declining truck sales, American Axle's rapid growth in supplying parts to General Motors' light trucks in North America has slowed sharply. GM accounts for more than 75 percent of American Axle's sales. American Axle's share of Chrysler LLC business is shrinking, too.

Shifting direction
American Axle plants mostly will close in the United States and open or expand elsewhere. Here's a rundown of plans for Axle's plants worldwide.
Closed: Buffalo, N.Y.
To close: Tonawanda, N.Y., forge; 2 Detroit plants
Consolidate: 2 Detroit plants
New: Oxford, Mich., forge; a second Michigan plant; Pune and Pantnagar, India; Rayong, Thailand; Olawa, Poland; Colombia; a second Mexico plant
Expand: Three Rivers, Mich.; Araucaria, Brazil; Guanajuato forge, Guanajuato sequencing center, Mexico; Changshu, China
Source: American Axle documents



Chasing rivals

"American Axle is tied to a market for pickups and SUVs that's being permanently downsized," said Wendy Thompson, a retired president of UAW Local 235 in Detroit. "I'm not surprised that they're not investing here."

Dauch must scramble to catch rivals such as Dana Holding Corp. in overseas markets. Dana has 36 light-axle and driveshaft operations in 18 countries outside the United States. Its driveline presence in Europe dates to the 1920s.

American Axle has five non-U.S. plants, including two in Mexico.

American Axle's shift from the United States to Mexico has begun. During a three-month UAW strike of American Axle this year, the supplier doubled the capacity at its Guanajuato, Mexico, plant to 6,000 axles per day. Guanajuato kept supplying GM light trucks despite the strike, which shut five American Axle U.S. plants and halted or hobbled output at nearly 30 GM plants. The strike was settled in May.

Since the company's founding in 1994, Dauch has spent more than $2 billion on his U.S. operations. Now he's mothballing some of them.

Mas Mexico

"Dick has more capacity here than he needs. He has no choice but to invest where he sees growth opportunities," said Dave Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

American Axle isn't giving up on the United States, but its customers here increasingly will be served from Mexico.

The bulk of Dauch's international business is in Mexico, serving customers there and in the United States. His Guanajuato plant complex has been expanded a half-dozen times.

Mexico is expected to generate $1.09 billion in revenue this year. In six years that number is expected to reach $1.75 billion. Over the next six years, American Axle plans to spend $452.1 million in Mexico.

Thompson, the former UAW local president, questioned whether Mexico was a good choice to manufacture axles for GM light-truck plants based mostly in the Midwest. Said Thompson: "I have a hard time believing that it makes economic sense to ship axles from Mexico to here."


He got his settlement, time to fuck the UAW