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American Axle, FormTech Swap Forging Operations

Dec. 6, 2008
AAM adds product line: differential gears

American Axle & Manufacturing and FormTech Industries L.L.C. have engineered an unusual exchange of assets. AAM is parting with its hub and spindle forging business, and will takeover FormTech's differential gear, hypoid pinion and ring-gear forging businesses.

American Axle will operate the 50,000-ft2 plant in Fort Wayne, IN, as a new subsidiary, AccuGear Inc., which will produce net-shaped differential gears.

While departing with the Fort Wayne plant, FormTech will takeover AAM’s Tonawanda, NY, forging operation. American Axle also reported it paid cash to FormTech to complete the exchange, but did not reveal the amount.

According to FormTech CEO Mike Oyan, the Tonawanda plant is being sold to an unnamed third party, and FormTech will lease a part of the site and operate four presses. “There is syngergy for both parties,” according to Oyan.

"Through this asset purchase agreement, AAM has strategically acquired new forging process technology,” stated chairman Richard E. Dauch. “This strengthens AAM's competitive position in the North American automotive forging market and enhances our ability to expand and diversify AAM's market penetration into transaxle components for passenger cars and crossover vehicles, as well as transfer case and all-wheel-drive components."

The Tonawanda plant had been one of the operations marked for closing following the labor agreement reached by AAM and the United Auto Workers union to end a three-month strike earlier this year.

The four-year agreement reached in May cut the domestic workforce by more than half for the driveline and drivetrain systems and components manufacturer. A plant in Detroit is also closing, and three other operations in Michigan and New York are being reduced. The salaried workforce is being reduced, too.

FormTech is a hot-, warm-, and cold-forging organization established in 2006 by investors who acquired the North American forging business of Metaldyne Corp. It’s operations are in Royal Oak, MI (wheel hubs, spindles, rolled rings, and transmission and differential gears); Fraser, MI (forged shafts, differential side and pinion gears); Detroit (differential gears, front-wheel-drive components, piston pins, steering sockets, suspension sockets, combustion plates, and end caps); Troy, MI (internal-spline shafts, shot-peened, heat-treated, and coated automotive parts); and Minerva, OH (pinion gears, shafts, and spindles.)