DETROIT -- American Axle & Manufacturing Holdings Inc. has been making truck axles and other parts since it spun off from General Motors in the mid-1990s.
But the suppliers business plan is changing with the realities of the world auto industry. Company executives say they are refocusing their strategy to capture more of the car and crossover market.
The move underscores how traditional North American auto suppliers are being pushed to change in the wake of the demands for lighter, more fuel-efficient vehicles.
American Axle already is struggling to rebuild its profit center. This week, the Detroit supplier said it posted net income of $13.1 million in the third quarter ending Sept. 30 on revenue of $774.3 million. That compares with a net loss of $62.9 million on revenue of $701.2 million during the same quarter last year.
Most business in North America
While revenues are up this year, annual sales had been declining since 2003, when total revenue reached $3.68 billion. The company gets 95 percent of its business in North America -- in a product line that is declining.
Right now our product line is almost 100 percent pickup truck and SUV, says Yogen Rahangdale, American Axle COO. By 2012 we want that to be about 75 percent as we pick up new business in the passenger car and crossover markets.
Rahangdale says the supplier also plans to move up the food chain as a Tier 1 supplier by continuing to expand its core business from driveline to drivetrain components.
Going from big to small, executives say, requires a change in thinking about design and manufacturing. American Axle is investing in test equipment, including new dynamometers, at its recently expanded 117,000-square-foot technical center in Rochester Hills, Mich., to bring new products to market.
One new drivetrain product targeted for smaller vehicles is the power transfer unit, designed for all-wheel-drive crossovers and intended to capitalize on a worldwide trend from rear-wheel drive to all-wheel drive.
John Sofia, American Axles vice president for product development, says there are orders for three different power transfer units for crossovers going into production in 2009-11.
American Axles new high-efficiency axle assembly uses a number of innovations to reduce friction and improve fuel economy. The axle is built with superfinished gear teeth and angular contact bearings along with a system that delivers lubricant where it is needed. The system reduces the amount of lubricant required by more than half.
Sofia says American Axle is working with four different customers on 10 passenger awd and rwd car and crossover programs launching between 2008 and 2012.
Approximately 50 percent of our $1.2 billion new business backlog relates to these new products and driveline systems supporting passenger cars and crossover vehicles, Sofia says.
American Axle, formed in 1994 when a group of investors bought the business from GM, operates 27 plants in North and South America, Europe and Asia.
The supplier has steadily been expanding its non-GM business, up from 3 percent in 1994 to about 24 percent in 2007. Rahangdale projects non-GM business to grow to about $1 billion of its total business in 2012. He says Chrysler LLC is the second-largest customer after GM with about 10 percent of total sales.
American Axle ranks No. 50 on the Automotive News list of the top 100 global suppliers with estimated worldwide original-equipment automotive parts sales of $3.19 billion in fiscal 2006.