American Axle Losing Interest In The "American" Part
With the nastiest auto biz strike of the year (so far) almost, not quite behind it, American Axle is looking away from its eponymous home country for future business. Automotive News (sub) reports that the axle supplier has already established itself in developing markets like Brazil, China, Mexico and Poland, and is looking to expand in Thailand and India. Thailand is the second largest pickup market after the U.S., and American Axle is looking to take over axle supply there for locally produced Chevy Colorado pickups. While company officials declined comment, GM is AA's biggest customer, and as AN points out, "the company does not build foreign plants without the promise of future business." With the Thai pickup market set to increase seven percent this year, and American truck and SUV sales already down 28 percent on the year, this has "inevitability" written all over it. In India, AA's first plant is just coming online, and there's already talk of a second. AAM Sona Axle Private Ltd, the joint venture with Sona Koyo is building a new corporate headquarters in Pune, India and there's talk of building a greenfield plant to supply Tata Motors. With at least two U.S. plants set to shut down in the wake of the the AA-UAW agreement, the American Axle name is beginning to develop a bitterly ironic ring. Is a generic supplier name-change (Visteon, Delphi, etc) in the offing?
In the next few years, replace American Axle with the name of your employer. All of Corporate America is looking for ways to move work overseas.
At some point, the weak dollar will stop the outsourcing. Exactly when that point will be is the question.
I think the bigger picture is being missed here. If the company made components for an automaker whose product was in strong demand, the component maker could afford to offer a decent wage. What the union "demanded" and what management could afford to give would not be that far apart. Now, with product demand in the crapper, and the union in a weakened state, the stage has been set for a demoralized workforce that will probably cause quality to suffer, which it turn will accelerate the outsourcing. Everybody ends up suffering, except for the very upper crust of management. As usual.
@ golden2husky, "I think the bigger picture is being missed here. If the company made components for an automaker whose product was in strong demand, the component maker could afford to offer a decent wage." This isn't really true. Vehicle manufacturers can charge anything the market will bare for a vehicle, however parts manufacturers only get to charge material cost + labor/overhead + small profit (unless they have some patented technology that is in high demand). In most cases the automakers design the parts or at least have a singificant hand in designing them, therefore nearly any vendor can be chosen. Since material costs are fixed those vendors with the lowest labor and overhead costs will always be favored regardless of how much or little the automaker is raking in on their end. And the difference in labor/overhead for a typical UAW plant vs say a Mexican plant for hundreds of thousands of parts is huge.