We are a Tier I supplier to the automotive industry. We manufacture, engineer,
design and validate driveline and drivetrain systems and related components
and chassis modules for light trucks, sport utility vehicles (SUVs), passenger
cars, crossover vehicles and commercial vehicles. Driveline and drivetrain systems
include components that transfer power from the transmission and deliver it
to the drive wheels. Our driveline, drivetrain and related products include
axles, driveheads, chassis modules, driveshafts, power transfer units, transfer
cases, chassis and steering components, transmission parts, electric drive systems
and metal-formed products. In addition to locations in the United States (U.S.)
(Michigan, Ohio and Indiana), we also have offices or facilities in Brazil,
China, Germany, India, Japan, Luxembourg, Mexico, Poland, Scotland, South Korea,
Sweden and Thailand.
We are the sole-source supplier to GM for certain axles and other driveline
products for the life of each GM vehicle program covered by Lifetime Program
Contracts and Long Term Program Contracts (collectively, LPCs). Substantially
all of our sales to GM are made pursuant to the LPCs. The LPCs have terms equal
to the lives of the relevant vehicle programs or their respective derivatives,
which typically run 5 to 7 years, and require us to remain competitive with
respect to technology, design, quality and cost.
We also supply driveline system products for FCA US LLC (FCA) for heavy-duty
Ram full-size pickup trucks and its derivatives, the AWD Jeep Cherokee, the
AWD Chrysler 200, and a passenger car driveshaft program. In addition to GM
and FCA, we supply driveline systems and other related components to Volkswagen
AG (Volkswagen), Audi AG (Audi), Mercedes-Benz, Jaguar Land Rover Automotive
PLC (JLR), Honda Motor Co., Ltd., Ford Motor Company (Ford), Nissan Motor Co.,
Ltd. (Nissan), PACCAR Inc., Harley-Davidson Inc., Daimler Truck and other original
equipment manufacturers (OEMs) and Tier I supplier companies such as Jatco Ltd.
and Hino Motors Ltd.
We are focused on profitable net sales growth and strengthening our balance
sheet by capitalizing on our competitive strengths and continuing to diversify
our customer, product and geographic sales mix while providing exceptional value
to our customers.
We have aligned our business strategy to build value for our key stakeholders.
This strategy emphasizes a commitment to deliver industry leading quality, technology
leadership and operational excellence. By focusing on this commitment, we can
achieve our key critical business objectives of product and customer diversification,
globalization and solid financial performance. This strategy includes the following
actions:
Maintain our high quality standards which are the foundation of our product
durability and reliability.
AAM has an outstanding daily track record for delivering quality products, having
averaged less than 10 discrepant parts per million (PPM) in 2015, as measured
by our customers.
In 2014, our Colfor Minerva Facility in Ohio, Auburn Hills Manufacturing location
in Michigan and Changshu Manufacturing Facility in China were recognized with
the GM Supplier Quality Excellence Award for outstanding performance.
AAM has an enhanced internal quality assurance system that drives continuous
improvement to not only meet but exceed the growing expectations of our OEM
customers.
Achieve technology leadership by delivering innovative driveline products which
improve the diversification of our product portfolio while increasing our total
global served market.
AAMs significant investment in research and development (R&D) has resulted
in the development of advanced technology products designed to assist our customers
in meeting the market demands for improved fuel efficiency; lower emissions;
enhanced power density; advanced, sophisticated electronic controls; improved
safety, ride and handling performance; and enhanced reliability and durability
for light trucks, SUVs, passenger cars, crossover vehicles and commercial vehicles.
AAMs EcoTrac® Disconnecting AWD system is a fuel-efficient and environmentally
friendly driveline system that provides OEMs the option of an all-wheel-drive
system that disconnects when not needed to improve fuel efficiency and reduce
CO2 emissions compared to conventional AWD systems. AAMs EcoTrac® Disconnecting
AWD system is featured on the AWD Jeep Cherokee and the AWD Chrysler 200. We
are currently designing the next generation of our EcoTrac® Disconnecting
AWD system which is smaller, lighter in weight and aims to recover up to 90%
of fuel penalty, compared to 80% currently.
e-AAM Driveline Systems AB (e-AAM) was created to design and commercialize battery
electric and hybrid driveline systems designed to improve fuel efficiency, reduce
CO2 emissions and provide AWD capability. We will continue engineering, developing
and commercializing electric and hybrid driveline systems for passenger cars
and crossover vehicles. In 2015, we secured a new driveline systems contract
featuring patented e-AAM™ electric driveline systems technology with a
premier global OEM.
AAM has established a high efficiency product portfolio that is designed to
improve axle efficiency and fuel economy through innovative product design technologies.
As our customers focus on reducing weight through the use of aluminum and other
conventional means, AAM is well positioned to offer innovative, industry leading
solutions for lightweighting. Our portfolio includes high efficiency axles,
aluminum axles and also AWD applications for plug-in hybrid electrical vehicles
to full-electric vehicles.
AAM continues to invest in R&D in emerging technology such as torque biasing
capability. We have developed capabilities in the areas of control systems and
mechatronics to further integrate electronic components such as motors, actuators,
and sensors into AAMs mechanical technology to enhance vehicle performance
and provide superior torque management.
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To accelerate AAMs technological advancements, in 2015 we began the move-in
phase of our Advanced Technology Development Center (ATDC) at our Detroit Campus.
This state-of-the-art facility will be our center for technology benchmarking,
prototype development, advanced technology development, supplier collaboration,
customer showcasing and associate training on our future products, processes,
and systems.
Sustain our operational excellence and focus on cost management to deliver
exceptional value to our customers.
In 2015, we successfully launched 18 programs and facilities to support our
customers. These launches included front and rear drive axles for a new global
passenger car program for JLR at our Swidnica Manufacturing Facility in Poland,
rear axles for a global light truck program for Ford at our Rayong Manufacturing
Facility in Thailand and front and rear axles for a full-size pickup truck program
for Nissan at our Guanajuato Manufacturing Complex in Mexico.
We continue to focus on cost management through the implementation of the AAM
Operating System to improve quality, eliminate waste and reduce lead time and
total costs globally.
Our stand-alone agreement with the United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW), which covers hourly associates at our Three
Rivers Manufacturing Facility, ensures market competitiveness at AAMs largest
U.S. facility into 2017. The collective bargaining agreements that cover hourly
associates at our MSP Industries Corporation and Colfor Manufacturing Inc. subsidiaries
expire in 2017 and 2018, respectively.
Diversify our business through the growth of new and existing customer relationships
and expansion of our product portfolio.
In addition to maintaining and building upon our longstanding relationships
with GM and FCA, we are focused on generating profitable growth with new and
existing global OEM customers. New business launches in 2015 included business
with key international customers such as Ford, JLR, Nissan, Mercedes-Benz and
others.
We have accelerated the development and launch of products for passenger cars
and crossover vehicles and the global light truck and commercial vehicle markets.
We have approximately $725 million of new and incremental business backlog launching
from 2016 to 2018, of which approximately 75% relates to AWD and RWD applications
for passenger cars and crossover vehicles.
Approximately 60% of our new and incremental business backlog launching from
2016 to 2018 is for customers other than GM. In addition, we are working on
$1.5 billion in quoted and emerging new business opportunities. These opportunities
would allow us to continue the diversification and expansion of our customer
base, product portfolio and global footprint. Substantially all of these opportunities
are for customers other than GM and feature our advanced technology such as
our EcoTrac® Disconnecting AWD system and e-AAM™ electric driveline
systems technology.
We also continue to evaluate and consider strategic opportunities that will
complement our core strengths and supplement our diversification strategies
while providing future, profitable growth prospects
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