Automotive News - March 24, 2008 - (Page 38)

38 • MARCH 24, 2008 Automakers eager as axles turn high-tech Robert Sherefkin and David Barkholz rsherefkin@crain.com DETROIT — Suddenly, axles are hot. New fuel-efficiency requirements are pushing automakers toward the latest driveline technology. Axle makers are boosting investments, despite a softening market, and newcomers are entering the field. Want proof that the auto industry cares about advanced axles? Follow the money. Chrysler LLC is spending $700 million on an axle plant in Marysville, Mich., north of Detroit. Chrysler manufacturing chief Frank Ewasyshyn says the automaker intends to open the plant in 2010 to tap fuel-efficiency gains available through new Mercedes axle technology Chrysler will incorporate into its vehicles. Dana Holding Corp. spent heavily on a new r&d center even as it struggled to leave Chapter 11. No longer in reorganization, Dana continues to develop a family of lightweight, hightorque axles, one of which is currently on the redesigned BMW X5 SUV. Canadian heavyweights Magna International Inc. and Linamar Corp. are using acquisitions and product research to expand their driveline offerings, pushing into segments long dominated by Dana and American Axle & Manufacturing Holdings Inc., of Detroit. Facing stiffer competition, American Axle CEO Richard E. Dauch is suffering through a costly UAW strike as he seeks to slash combined wages and benefits closer to the average $14 an hour paid at Dana. That would at least halve the current labor costs at American Axle. Thomas Stone, president of Dana Holding Corp.’s traction products division, shows an axle Dana makes for the Ford Fusion sedan. Axle roster The list of axle suppliers in North America is growing. CURRENT PLAYERS Dana Aisin American Axle ZF MOVING INTO THE FIELD Say the word “axles,” and many people think old-line forgings. But Dana Holding Corp. relies on this high-precision manufacturing cell at its plant in Orangeburg, S.C., to produce axle components for BMW. Magna Linamar No longer a commodity Until a few months ago, axles were widely seen as a low-tech commodity. The typical pickup or SUV buyer doesn’t ask about axles. Little incentive existed to invest heavily in axle technology. Many analysts thought Chrysler and Ford Motor Co. would sell their internal axle divisions. Conventional wisdom said they could get better technology at a lower price from outside. That’s not the case today. Ford manufacturing chief Joe Hinrichs says the automaker is holding on to its axle plant in suburban Detroit. Chrysler is confounding skeptics by building its new plant. For General Motors purchasing czar Bo Andersson, an advanced axle is a high-tech precision part, not a commodity. “It is a safety-critical component that provides a vehicle’s driving characteristics,” he says. “It’s one of the five most expensive parts, and it is 10 times more complex than seating.” Talking drivetrains with American Axle Mark Barrett is executive director of engineering and product development at American Axle & Manufacturing Holdings Inc. He spoke with Staff Reporter Robert Sherefkin about changes in the business. The auto industry has been building axles for more than a century. What more can you do to axles to improve fuel efficiency? Several things. We’ve been actively working on engineering development of products for about four years. The natural thing is to jump to aluminum parts. We’ve been making aluminum (axle housings) since 1984. The thing is to reduce mass. The internal axle components are all prime areas for opportunities to improve efficiencies. What efficiency gains are available? Axles typically, depending on how you test, are 94 to 97 percent efficient. So if you look at the auto driveline, transmissions and engines are the least efficient. That is why you see cylinder deactivation. There is a very small gain with the axle, and we are working on that and can give tenths of a gallon of improvement. That is very significant. How will you achieve it? There are various technologies out there. The most important is the type of lubricant in the axle and the quality of it. We started the program four to five years ago for efficiency and heat reduction. Power Film, a synthetic lubricant which we patented, will be released in the 2010 time frame. The lubricant by itself was a significant improvement in fuel economy. What kind of driveline electronics are you looking into? Electronics is what we see a lot of in the future. Most of the technology today is mechanical means of torque control. In the future, transfer cases we will supply will have electronics. c Q&A 2 key developments Two developments in 2007 upped the ante on axles. 1. Congress raised fleetwide mileage requirements to 35 mpg by 2020, the first legislative increase in nearly three decades. The stiffer rules begin to take effect as of 2011. Chrysler’s Ewasyshyn says the axles built in Marysville will operate with less friction than the previous generation of Chrysler axles. The improvement could be 3 percent. That may not sound like much, but every little bit helps. Plus, new axles on pickups and SUVs would raise the efficiency of the least-efficient, highvolume models, thus going a long way toward boosting the overall corporate mileage numbers. 2. The UAW reached landmark new contracts with the Detroit 3 that would cut the cost of running an axle plant. The axle plants at Chrysler and Ford received special UAW designation for a two-tier wage structure. Any new hires will earn $14 an hour instead of the prevailing $28. With both automakers now offering buyouts and early retirements to prune their ranks of veteran workers, their axle plants could become lowwage operations on a par with the lowest-paid competitors, such as Dana. The spending on advanced axles comes in the face of shrinking sales. Rising gasoline prices are especially hurting light-truck sales and thus volumes of the highestprofit axles. In 2007, U.S. lighttruck sales fell 1.9 percent to 8.27 million vehicles. The sector slid an additional 8.4 percent through February to 1,128,055 units. Chrysler’s decision to proceed with the construction of the Marysville plant surprised several axle makers. They had been salivating at the opportunity to bid on the 1.2 million axles per year that Marysville will produce. New work Suppliers still may get some work from Chrysler. The carmaker is expected to build gears and assemble axles at Marysville. Chrysler could turn to outside suppliers for axle shafts, axle carriers and differential cases. Those represent about 30 to 40 percent of the cost of an axle. Handing off even part of Chrysler’s axle business would represent a major opportunity in drivelines, where only an estimated 30 percent of all contracts are subject to open bidding. Dana worked closely with the UAW to reduce its labor costs while in Chapter 11. Now it thinks it is wellpositioned to get any new outsourced Chrysler work, says Thomas Stone, president of Dana’s traction products division. Smelling opportunity, new suppliers are moving in. Late last year, Linamar acquired Ford’s power transfer unit business at a plant in Nuevo Laredo, Mexico. A power transfer unit helps change a twowheel-drive vehicle into an allwheel-drive one. “We are heading in the direction of becoming a complete driveline system supplier,” says Crystal Roberts, a spokeswoman for Linamar, of Guelph, Ontario. Magna is a major European driveline supplier, but its North American goals have been limited — until now. “Magna is hiring former GM and Chrysler powertrain people to develop their design capabilities here,” says a person familiar with the Aurora, Ontario, company. Suppliers think automakers are prepared to pay for fuel-saving technologies, including advanced axles. Andersson, GM’s group vice president for purchasing and supply chain, told Automotive News last month: “As a buyer, I don’t like to say this, but you will see great returns from companies that are successful in this area.” c

Table of Contents Feed for the Digital Edition of Automotive News - March 24, 2008

Ford lists 6 to succeed Mulally GM pushes luxury superstores Industry straps in for rough ride Bob Irvin is a worthy addition to Hall of Fame Debate at Scion: How to grow Ford moves executives in Asia to new jobs CEO of lanelogic: We're still here Kia's N.Y. duo Chrysler's exec trio: Reports of friction mostly fiction Where others see gloom, Honda chief sees boom in U.S. Fukui: Nickel battery is best bet for hybrid Beijing conference explores key issues in China market Planworks keeps its role as buyer for GM ads Lincoln: MKS will make up for brand's slow start in '08 Deal's no big deal: Styling top reason to buy GM Penske's Smart start: He'd like 15,000 more Dodge's pitch for Challenger: A halo that you can afford Chrysler plans 'We listen' ads You go, Bob With zest, activist Ditlow remains on lemon patrol Autos did the job after 9/11; don't bet on that now Chinese cars? Dealer beware Solar power is the only answer Where will we get power for the Volt? Want higher CAFE? First, do this In N. California, hybrids are hot Detroit 3 can learn from the Marlboro Man The Prius is a phenomenon Wait 3 years, then judge Ford How many Jeeps will India buy? Lithia looks into improper sales reports at dealerships AutoNation's lead shrinks as largest U.S. dealer group Honda ad agency creates unit to build Acura brand Study: Consistent theme in auto ads builds viewer recall Big-truck sales continue slide in Feb. -- off 27.1% MazdaSpeed revs up racing accessory sales Calif. company eyes electric charging stations for Volt, Vue Indictment: Bribe scheme cost GM $83.3 million The greening of Toyota dealerships 6 more finalists in race for PACE recognition Tenneco expands Japanese work, seeks more Bosch buys diagnostic equipment firm in China JV will design vehicle platforms Citation moves headquarters NxtGen tests emissions system VW stake may help Porsche on fuel economy rules Chrysler's Project Genesis wins over Ore. dealer Germany, new EU members send up European sales Saturn will choose store system soon VW thinks modular for flexibility at auto plants Automakers eager as axles turn high-tech Talking drivetrains with American Axle Dollar halts U.S. retail sales of Audi Q7 hybrid Hyundai: Genesis Coupe offers more go for dough Maxima's target: Luxury Euro makes Pontiac adds 3 sporty variants Outsider Elmer Johnson shook up GM Importer Yanase was Hall of Fame member Obituaries Redesigned TSX has many Acura firsts Dealers Certified sales up 7.5% in Feb.; Audi leads the way eBay's new Web site has new look, more features Big pickups and SUVs lead plunge in used-vehicle prices Ex-Reynolds CEO O'Neill joins J.D. Power Auto Hall of Fame will induct 8 Liberatore looks beyond Daimler Molina gets the top job at GMAC F&I pioneer Pat Ryan to retire from Aon Study: Hydrogen research worth the cost Gulf States trial halted As yuan rises, so do prices of Chinese parts Personnel exec Laymon: Ford still seeking outside talent GE gives supplier credit Dana CEO wants Asian growth Tesla launches production Todt steps down as Ferrari CEO Union pursues Toyota effort Chrysler offers spiffs for military Land Rover ads focus on heritage Mark Rechtin Fresh heir: To turn green, must BMW create brand? GM ponders mini-muscle Camaro New Ford ads coming in April With a spiffier image, Lincoln would rock abroad Rival says Nardelli's OK Ford hails its cab, but mpg is an issue

Automotive News - March 24, 2008

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