American Axle to avoid Chapter 11

From the Detroit Free Press

American Axle & Manufacturing Inc. said Thursday it reached a new deal with its lenders and its largest customer, General Motors Co., that will allow the supplier to avert a bankruptcy filing.

The new deal ends months of negotiations between the Detroit-based supplier, its banks and GM after American Axle breached the terms of its loan when its debt and interest costs ran too high.

This passed me by at the time, but it’s dated September 18th. A friend who lives in the effected area pointed it out to me.

The deal American Axle negotiated doesn’t cut the company’s debt. But it does give American Axle cash to maintain its operations through the industry’s downturn, to a time when the company might be able to repay its loans.

I imagine this is good news for their suppliers and workers, but also might set a precedent (and perhaps a blueprint) for metal stampers to follow through these hard times.

Metaklett, A Steely Hook And Loop Fastener

From Science Daily:
Hook and loop fasteners have become commonplace features of both industry and households. However, they have one snag: they are too weak for many applications. Hook and loop fasteners made of spring steel have now been developed at the Institute of Metal Forming and Casting of the Technische Universitaet Muenchen. These fasteners are resistant to chemicals and can withstand a tensile load of up to 35 tonnes per square meter at temperatures as high as 800°C.

Spring Steel Velco, that’s what we’re talking about here.

Temperatures in excess of 800 °C and aggressive chemical solutions do not pose any problem for Metaklett, which also offers adhesive strength of up to 35 tonnes per square meter when tensile force is applied parallel to the fastener surface. When it is applied perpendicular to the fastener surface, Metaklett can still withstand a force of seven tonnes per square meter. Moreover, like a standard Velcro® fastener on a child’s shoe, it can be opened and closed again without the help of any tools.

You can read the original press release from TUM (Technical University of Munich) in English . A German language version is also available on that page. Use the language buttons in the upper right corner.

US to loan $5.9 bln to Ford to aid fuel efficiency

Well, this is interesting, especially when combined with a few other developments I’ll speak about after the quote.

The US government will loan 5.9 billion dollars to Ford Motor Co. and 1.6 billion dollars to Japanese automaker Nissan to invest in improving the fuel economy of their US-built vehicles, officials said Tuesday.

The loans are the first awarded out of a 25-billion-dollar program to help automakers meet upcoming fuel efficiency standards, Energy Secretary Steven Chu said at a press conference.

“These loans will help the auto industry meet and even exceed the president’s tough new fuel standards while creating jobs, reducing our dependency on foreign oil and ensuring America’s competitiveness.”

Another 465 million dollars will be loaned to electric sports car maker Telsa.

Additional loans will be awarded to “large and small automobile manufacturers and parts suppliers up and down the production chain” over the coming months, said Chu

Ford will use the 5.9 billion dollars retool plants in five states and boost the fuel efficiency of close to two million new vehicles annually.

Nissan will use the loans to modify its Tennessee plant to produce zero-emissions electric vehicles and the lithium-ion battery packs to power them.

As I mentioned above the quotes, there is an interesting tie-in for this blog. A lot of metal stamping dies, and the original production of them, have gone off-shore.

There are a determined bunch of people in Detroit (and no doubt in other places too, but I only know about the Detroit bunch) who want to play catchup and bring their toolmaking lead time and costs down, in line with off-shore toolers, in order to keep that work onshore. I’ve kept in loose touch with a few of them, belong to some of their groups on LinkedIn and other places, and in general applaud what they’re doing. I did, however, question their belief that they could bring 50% of the diemaking that went offshore back. I don’t think those dies are coming back unless and until they need to be retooled.

This may be the retooling opportunity they’re looking for/need. Retooling for greater efficiency means making better use of steel components, smarter brackets with stiffening ribs instead of using thickness to get the strength needed, use of aluminum where possible, etc. These things mean new dies, and therefore, a chance to start over again on-continent.

So this may well be a very good thing.

Auto parts makers to shed 37,000 jobs this year, Conference Board forecasts

More bad news for Canadian stampers. One can expect roughly the same results south of the border, at least in proportion.

From Yahoo! Canada Finance

The Conference Board of Canada says auto parts makers will cut 37,000 jobs, or about one third of their workforce in Canada, as the North American industry undergoes massive restructuring.

The sector has been shedding jobs for years, but this year’s losses are expected to top the total of the last four years combined.

Ontario will be hard hit by the job losses since the province has most of the parts companies.

Chrysler dealers left without vehicles

Here’s another amusing (well, probably not to the dealers) side of the Chrysler saga. From the (Toronto) Globe and Mail:

Chrysler Group LLC will start cranking out vehicles at seven of its North American assembly plants on June 29, but some Canadian dealers say they will be unable to restock their dealerships with new vehicles because they can’t get the financing they need.

Inventories have fallen to minimal levels […but many …] can’t order new cars and trucks because they are still waiting for financing approval from GMAC LLC

This is another example of cascade failure I spoke about earlier. Seemingly unrelated things combine to topple systems that should continue to work. If it were easy to get credit another way, these dealerships would not be having a problem. They might pay a little more for credit from someone else, but at the moment, all other sources are choked off, and this one is slow.

This is another bottleneck on the road to a recovery for stampers.

Chrysler plants will open in weeks: Fiat

From Canadian Manufacturing News, a Rogers publication. Some tentatively good news for stampers:

Fiat [which now controls Chrysler] announced plans to resume production at its Brampton and Windsor plants and five other North American factories at the end of June.

In addition, parts stamping, engine and transmission factories that feed those plants also will restart June 29, Chrysler said in a statement.

GM aftershocks

From the Globe and Mail, today. Someone is starting to think about parts suppliers now.

The impact of GM’s Chapter 11 filing has already started rippling through the supply network. Several companies, including Lear Corp., Johnson Controls Inc., TRW Automotive Holdings Corp. and Magna International Inc., are among GM’s largest creditors. Lear, which makes seats, is owed $45-million and Monday said it won’t make a semi-annual interest payment of $38-million that was due June 1.

From further down in the article:

The parts industry has been reeling for months. Canadian parts suppliers have seen their production fall an average of 40 per cent in the past year or so and roughly 10,000 jobs have vanished.

Last week alone two major U.S. parts makers, Visteon Corp. and Metaldyne Corp., filed for bankruptcy protection, joining five others this year.

Yesterday I reproduced a list of suppliers owed money by GM. The conclusion is that these people will lose much, if not all, of that money. There are roughly $400 million (US) owed to parts suppliers. I thought that number was low, but today’s Globe article claims that, in advance of the court proceedings, many parts suppliers were paid up until the end of April (very rare for automotive, it would be more usual to have 75 to 90 days outstanding).

So we are left to ponder cascade effects. Another quote from the article

JPMorgan Chase & Co. analyst Peter Acciavatti said in a recent note that based on debt-trading levels, Lear, American Axle & Manufacturing Holdings Inc., Cooper-Standard Automotive Inc., and at least one other company “appear to be on the verge of bankruptcy.

GM Declares Bankruptcy

Well, given the events of the last few weeks, this is hardly a surprise. None-the-less, now it is really happening.

From Yahoo Finance, originally from AP

General Motors Corp. filed for Chapter 11 bankruptcy protection Monday as part of the Obama administration’s plan to shrink the automaker to a sustainable size and give a majority ownership stake to the U.S. government.

GM’s bankruptcy filing is the fourth-largest in U.S. history and the largest for an industrial company. The company said it has US$172.81 billion in debt and $82.29 billion in assets.

They owed more than twice what their assets were. The big question now is, how much of that debt was tooling owed to metal stampers and other outsources? How many upstream businesses will fail now because of the defaults? How many jobs will be lost? Is there protection for the supplier chain as part of this deal? I know it was a slow, negotiated slide into bankruptcy, but was saving the supply chain a part of the negotiations? I’ve heard lip service paid to this idea in the press in the last month, but see nothing in todays headlines that is on point.

From the same article:

the automaker will permanently close nine more plants and idle three others

and the article contains unconfirmed speculation on where those dozen plants likely are.

The downsized GM’s brands will be limited to Chevrolet, Cadillac, GMC and Buick. Its Pontiac, Saturn, Hummer and Saab operations will be either sold or closed.

I never got the point of Hummer. Not as a car, not as a part of GM.

It’s a shame about Pontiac. We had one when I was a kid. Everyone did.

Saturns are good cars. Everyone I know with one loves it. I don’t understand why they’d sell it.

It’s a shame what they did to Saab. It was a good brand. My boss in Germany had one 20 years ago, and it was a wonderful car. But it became the Commodore Amiga of the auto world. They bought it and had no idea what to do with it.

The Globe had an interesting list of who the creditors are (or should we already speak of them in the past tense?)


Name of GM creditor and amount of claim.

  1. Starcom Mediavest Group $121.54-million (U.S.). Not a parts supplier, as far as I can see.
  2. Delphi Corp. $110.88-million. parts supplier
  3. Robert Bosch $66.25-million. parts supplier
  4. Lear Corp. $44.81-million. parts supplier
  5. Renco Group $37.33-million. not sure
  6. Enterprise Rent A Car $33.10-million. not a parts supplier
  7. Johnson Controls Inc. $32.83-million. parts supplier
  8. Denso Corp. $29.23-million. I believe these are the rust proofers
  9. TRW Automotive Holdings Corp. $27.52-million. parts supplier
  10. Magna International Inc. $26.75-million. parts supplier
  11. American Axle & Manufacturing Holdings Inc. $26.74-million. parts supplier
  12. Maritz Inc. $25.65-million. ? there are several companies named Maritz
  13. Publicis Groupe SA $25.28-million. Advertiser, I think
  14. Hewlett Packard Co. $17.01-million. computer maker
  15. Interpublic Group of Cos Inc. $16-million. marketer

Not to diminish the damage to non-parts manufacturers, but this is a metal stamping blog. There’s a lot of part suppliers out there with their unmentionables flapping in the breeze this morning.

Tax Funded Head-Start for Low Cost Country Tool & Die Makers

Joe Brown, in his blog, wrote an excellent, fictionalized (I presume) account of what it’s like to be laid off, followed by an excellent analysis of why we’re losing tooling money offshore and how the car companies are encouraging this.

What if we added that not only were taxpayer funds being funneled to China, the very recipients of these taxpayer funds, (GM, Chrysler and hundred’s of Tier 1 parts manufacturers) gave the Chinese competitors to North American manufacturers a 5-9% cost advantage by paying these Chinese suppliers on far better terms than they would pay say a company in Grand rapids, Detroit or Windsor.