Last week, the AP reported that “Companies that crank out gears, hoses, gauges, and other parts for US automakers are making a comeback.” They went on to report that not only are many of these companies profitable again, but some are cautiously hiring after months of layoffs. The revival of these suppliers, and the auto industry as a whole, is driven by rising auto sales and the suppliers’ own painful cuts during the downturn.
These companies are among the more than 2000 US companies that make just about all of the 10,000 parts that make up a single car or truck. You name it and they make it. Though many of these suppliers are concentrated in the Great Lakes area, many more are in several southern states and Texas or California. They employ more than 420,000 people and are part of the complex supply chain that turns sheet metal and plastic into Chevys and Fords.
Some of the biggest suppliers like Gentex, BorgWarner, and Federal-Mogul have even reported millions in first quarter profits – a reversal of huge losses from early 2009 when the auto industry nearly collapsed. One supplier in particular, American Axle & Manufacturing (AAM), announced it had earned $16.3 million in the first quarter. By comparison, AAM posted a $32.7 million loss in the first quarter of 2009. AAM, which makes drive train and chassis systems, believes the profit turnaround came from higher production demands for sport utility vehicles and trucks at Chrysler and GM.
Michigan’s Oakland Press reported that AAM’s co-founder and CEO Richard Dauch said, “AAM’s financial results for the first quarter of 2010 continued a positive trend of improved profit and cash flow performance.” He also credited the “favorable impact of improving global industry conditions” and cost cutting as reasons for AAM’s turnaround.
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