Richard E. Dauch Co-Founder, Chairman & CEO American Axle & Manufacturing
Life in the Fast Lane
Global Car and Truck Production: 2005-2012 Region 2005 (M) 2012 (M) Net Change (M) % Change Japan/Korea 13.66 15.03 + 1.37 + 10.0% Western Europe 15.79 16.56 + 0.77 + 4.9% North America 15.78 16.65 + 0.87 + 5.5% South America 2.81 3.74 + 0.93 + 33.1% Middle East/Africa 1.39 2.24 + 0.85 + 61.2% Central / Eastern Europe 4.14 6.97 + 2.83 + 68.4% Greater China 4.73 9.76 + 5.03 + 106.3% Southern Asia 3.97 6.71 + 2.74 + 69.0% Total 62.27 77.66 Source: CSM Worldwide
The Auto Industry is Disproportionately Growing Outside of North America
Automotive Transplants Legend: Original Equipment Manufacturers Suppliers
Detroit Economic Club May 10, 2004
Automotive Industry Supply Base Continued price pressure Rapid volume reductions High legacy costs Excess capacity Under-utilized workforces Restricted operational flexibility Closing / selling domestic plants Attrition programs
North American Auto Suppliers Idling operations Liquidating Restructuring Selling of assets 85% of the Auto Suppliers in the 1995 Phone Book No Longer Exist
Worldwide Automotive Supplier Consolidation 30,000 Economic Climate will Accelerate Supply Base Consolidation or Elimination 10,000 4,000 1990 2000 2010
A RECESSION is when you tighten your belt; A DEPRESSION is when you have no belt to tighten; And, when you have no pants to hold up, it is a PANIC!
Sweeping Resizing of Detroit s s Automakers and Supply Base
Structural Change of the American Automotive Marketplace
Structural Change Resizing to create new business models Redefining of labor relationships Rationalizing and deploying of installed capacity Streamlining of brand portfolios, dealer networks and distribution networks
Finding the Right Balance Mindset: Doing Things Twice as Good, Twice as Fast, With Half the Resources
Welcome to Global Competition!
The Keys to Survival and Growth Meeting the demands of: Intense global competition Customer demands for world pricing Dealing with rapidly escalating production costs
It is Essential that U.S. OEMs and Key Suppliers Flourish
Manufacturing is How We Pay Our Way In the World
Life in the Fast Lane
Technology Product, Process & Systems
CAFE Corporate Average Fuel Economy
Electric All-Wheel Drive (EAWD) Chevrolet Cobalt
Electronics Integration Electronic Stabilizer System Jeep Wrangler Rubicon Dodge Power Wagon
Global Leveraging Global Assets
Leveraging Global Assets Design Engineering & Product Development Resources Sales IT Systems Procurement Manufacturing Operations Global Capability & Capacity Common Parts & Manufacturing Processes Global Business Plan
Global Technical Capabilities World Headquarters Engineering Staff Australia Office Engineering Staff India Office Design Services & Technical Analysis Japan Office Engineering Staff Global Manufacturing Sites Engineering Staff European Office Engineering Center & Engineering Staff USA - Technical Center Test & Validation Engineering NVH Engineering Materials Engineering Advanced Engineering Electronics & Software Engineering Accreditations: ISO 9001 Certified TS 16949 Materials Lab: A2LA South American Office Engineering Center & Engineering Staff Korea Office Engineering Center & Engineering Staff China Office Engineering Center & Engineering Staff
Global Engineering Benefits 1. Better proximity to customers and new markets 2. Ability to engineer around the clock, 24 hours a day 3. Allows us to get our products from concept to market faster
Materials & Procurement Total Landed Cost Approach
Total Landed Cost Approach + Supplier Development Freight Costs Modes of Transportation Energy Inventory Customs Warehousing Carrying Costs Piece Price Selecting the Right Supplier
Emerging Automotive Markets Satellite Image Courtesy Google Maps
Emerging Automotive Markets China
Emerging Automotive Markets China India
Emerging Automotive Markets Globalization is Here to Stay!
Competitive Cost Structures
2007 and 2008 Union Negotiations
AAM s Colfor Manufacturing Minerva, Ohio
Flexibility
Flexibility Workforces Human Resources Operations Machinery, Equipment & Tooling Make / Buy Decisions Sourcing Business Financial Performance Business Thinking & Mentality
Restructuring Demands Change Re-engineering Alliances Quality Efforts Downsizing Buy-outs Real Transformation Takes Time Right-sizing Acquisitions Mergers Attrition Programs Re-strategizing Negotiations
Successful Suppliers Workforce / Team harmony Bullet-proof quality Technological advancement Product innovation Product expansion Customer diversity Global footprint Steady profitable growth Rejection of get-big-quick acquisitions Outstanding warranty performance On-time delivery Packaging Reliability Durability Continuous improvement
Change!
AAM Original Five Facilities Detroit Gear & Axle Detroit Forge Three Rivers Buffalo Gear, Axle & Linkage Tonawanda Forge
AAM Global Presence Korea Business Office Seoul, South Korea Albion Automotive England / Scotland Technical Center Rochester Hills, MI MSP Industries Colfor Manufacturing World H.Q. Detroit Gear & Axle Buffalo Gear, Axle & Linkage Three Rivers Tonawanda Forge Cheektowaga Machining Guanajuato Gear & Axle Guanajuato Forge Silao, Mexico Olawa Manufacturing Facility Olawa, Poland Changshu Manufacturing Facility Changshu, China European HQ & Engineering Center Bad Homburg, Germany AAM do Brasil, Araucária, Brazil South American Business Office, Sáo Paulo, Brazil India Business Office Puné, India Japan Business Office Tokyo, Japan China Business Office Shanghai, China
Manufacturing: A Noble Profession!
I have never seen so much change in a relatively short period of time. And the chances are good that the change will be even greater in the future. Keith Crain October 2006
Life in the Fast Lane
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