TRAVERSE CITY, Mich. - Dana Corp. has edged out a key General Motors supplier to snag an axle contract valued at as much as $200 million annually.
Dana won the contract to supply full-sized passenger and cargo vans beginning with 2003 models from American Axle and Manufacturing Holdings Inc., which has the current GM van contract, according to people familiar with the deal.
The contract has a touch of poetic justice for Dana, the world's largest maker of light-truck axles. Late last year, it lost the contract to supply axles for the next-generation Dodge Ram pickup to American Axle.
Bill Carroll, president of Dana's Automotive Systems Group, would not discuss the new contract or the customer. But he confirmed the company had picked up 'an important new program' that calls for Dana to produce at least three sizes of axles for passenger and cargo vans, such as the Chevrolet Express and Chevy Van.
He put the contract's value at between $150 million and $200 million annually.
The five-year deal is notable in the supplier industry because it strengthens the role of Toledo-based Dana as a major GM supplier. Dana's largest customer is Ford Motor Co., followed by DaimlerChrysler.
The new contract is also surprising because American Axle is closely tied to GM. American Axle was created out of five former GM plants acquired by American Axle Chairman Richard E. Dauch and a group of investors in 1994. GM provides the bulk of American Axle's business.
Carroll said the contract was 'good conquest business,' but did not elaborate.
Dana has suffered a double-whammy from DaimlerChrysler. The company is supplying axles for the DaimlerChrysler B van, the platform shared by the Dodge Ram Van and the Dodge Ram Wagon. But that platform ends in 2002.
And the loss of the next Dodge Ram pickup - a contract also worth about $200 million a year starting with the 2003 model year - was partly the result of past quality concerns.
DaimlerChrysler cultivates long-term relationships with suppliers. But the automaker was unhappy with Dana over noise problems on Dana axles on the Jeep Grand Cherokee.
It had been redesigned at a cost of $2.65 billion, including a new powertrain and four-wheel-drive system, in part to be quieter than the previous model. But customer complaints about a noisy axle surfaced shortly after the start of production in 1999. Dana denies that quality was a factor in losing that contract.
But Carroll said improvements in noise and vibration reduction were a critical part of winning its newest contract. Vans present technological challenges to axle makers because noise generated in the chassis is magnified through the boxy metal body.
'Technology is survival for us, and we have to keep that edge,' Carroll said.
An industry source said Dana will use TRW Inc. to supply at least one disc brake component for the GM axle modules. Ronald Cutler, vice president for marketing at TRW Automotive, would only say that 'We're involved.'
The GM axles will be built at Dana plants in Columbia, Mo., and Buena Vista, Va.