DETROIT -- American Axle & Manufacturing Holdings Inc. is joining the auto industry stampede into China with plans to open its first plant there in November.
But it faces many challenges. Logistics costs are high, and quality must be, too.
There also are language and currency barriers, plus the wild card of dealing with an intrusive government.
Keeping talent can be difficult, too. Top engineers are a sought-after commodity in China, often bouncing from job to job for steep salary increases.
Despite these hurdles, American Axle is fast-tracking its plans and expects to break ground this spring.
The plant is expected to be 175,000 square feet and will produce driveline systems in the port city of Changshu, which is near Shanghai. Ultimately, it is expected to employ 350 to 400 people. Future expansions could push it to more than 350,000 square feet.
Initially, the supplier says, its parts will be for the Asian market.
While new to China, American Axle has considerable foreign experience. It has plants in Mexico, Brazil and England and has offices around the world, including one in Shanghai.
David Dauch, executive vice president of commercial and strategic development, says a presence in China is necessary to keep up with global business demands. He says American Axle is taking a long-term approach to the market.
"We're not making a fly-by-night investment that we're going to pick up and leave tomorrow," Dauch told Automotive News in an interview at the supplier's headquarters here.
Dauch says the plant will supply Korean automaker SsangYong Motor Co. and a customer in China that it wouldn't identify.
Chinese automaker Shanghai Automotive Industry Corp. has a controlling interest in SsangYong. SAIC is owned by the city of Shanghai and has partnerships with General Motors and Volkswagen AG.
About 40 percent of the plant's production will be derived from local content. American Axle says the figure is a government-mandated minimum and includes materials, overhead and labor.
Unlike many U.S. companies, the supplier is forgoing the joint-venture approach
American Axle ranks No. 35 on the Automotive News list of the top 100 global suppliers with worldwide original-equipment automotive parts sales of $3.60 billion in 2004. It relies on GM for about 78 percent of its business.
You may e-mail Greg Migliore at [email protected]