Okay, we're going to get going with the next presentation. Once again, I'm Ryan Brinkman, U.S. Automotive Equity Research Analyst at JPMorgan. Very excited to have with us Chris May, Executive Vice President and Chief Financial Officer of American Axle & Manufacturing, and David Lim, Head of Investor Relations. I think Chris has got a few minutes of prepared remarks, a slide or two, and then we'll engage in a fireside chat. Thank you.
All right. Good morning, everybody. Happy Tuesday. Hopefully, everyone's having a great day so far. Ryan, thank you for hosting this. Of course, thank you to JPMorgan as well. This is always a great event to come to and talk about American Axle and the current goings-on inside the industry. Before we begin, I do direct your attention to all our forward-looking statements and disclaimers. You can find those on our investor webpage at www.aam.com. With that said, look, we're coming off an exciting time here for American Axle . We're coming off a very strong second quarter. You continue to see the underpinnings of our company's operational performance from our driveline business unit and our metal forming business unit continuing to have sequential and year-over-year margin growth, continuing to have strong free cash flow generation.
I'm sure you'll have some questions associated with that as we go along. Equally exciting inside of 2025 for us, of course, is our acquisition and combination with Dowlais. This has been an outstanding transaction for us here, which we announced in early January. It continues to come together. Most recently, we hit another significant milestone where shareholders of both companies approved the transaction. We continue down the regulatory front, making great progress. We have a few more to go to clear through that, and we are tracking towards a fourth quarter close this year. I'm sure you'll have some questions on that as we go along the way. We are absolutely excited about this transaction. It's going to transform the company, and you're going to see an outstanding driveline and metal forming supplier, the best in the world, in my opinion.
In addition to Dowlais, in addition to our second quarter, we continue to build the base of our business. We continue to grow our company as a standalone AAM. We announced in mid-June and talked a little bit about this on our earnings call last week. We won a business award with Scout Motors. As you know, that's a new foray into the North American truck industry with EV products and range extending products. That will feature our electric beam axles and electric drive units in the front. Another growth pool here for the company, really putting on display our strength inside of North America, our strength inside of that great niche of beam axle products, and really our technology on full display in terms of the EV application and growth sectors, which is inside the industry. Excited to talk about our company here today.
A lot of great things going on. Maybe, Ryan, I'll turn it over to you and we'll go from there.
Great. Thanks so much. We're asking each of the companies at the conference a few standard questions. One is on the impact of tariffs for the industry overall, for their company in particular. How have you managed so far the direct impact on American Axle ? How are you thinking about the indirect impact going forward in terms of the potential for demand destruction as automakers raise prices, if they will? Have you changed your estimate of normalized demand in the U.S. or North America production as a result of tariffs?
Maybe we'll kind of break that question down to a few parts. We'll start with a little bit as it relates to tariffs that impact our company. Our goal as a company is to mitigate the majority of the impacts in terms of tariffs to our business, especially from a direct standpoint. We are leveraging our install base. We're working with our supply base to where we can either move product or reconfigure some of the logistics of our products to either avoid some of those tariffs. In the case where we are unable to do so, we're working closely with our customers in terms of our end products and ultimately reach commercial resolution with our customers to offset any, I would call it, residual tariff costs to the company.
I think some of the good elements inside of our product structure, as you know, we're leveraged very heavily inside of North America. Over 90% of our finished good products are USMCA compliant. That makes it very attractive for our customers and easier for them to sort of navigate our products through their supply chain. Just as a reminder, our customers typically take delivery from our docks of our finished good products. The bulk of our other products that we source inside of North America most are also USMCA compliant. Mitigation is key to us. Ultimately, customer recovery, which we're working through with our customers now, which I would expect to receive final resolution in the back half of this year.
Thank you. My second question is to ask what your very latest outlook is for vehicle electrification, including in light of the recent changes to the regulatory backdrop, such as the elimination of the $7,500 U.S. federal consumer tax credit and the relaxed enforcement of greenhouse gas and corporate average fuel economy standards. How has your outlook evolved and in what ways might you be running the business or allocating capital any differently?
Yeah, that's a great question. As you know, that's always a tricky one to answer, especially over the last few years. If you follow our commentary, you follow our product set, we have been believers in electrification. We've invested into this space to design products. As I mentioned in my opening remarks, we've continued to win in the Scout marketplace. Holistically, the segments we've participated in, especially the full-size truck segment in general, our view has been this would be one of the last to electrify. We were probably, using my words, a little skeptical of the pace of adoption over the last couple of years. I think that pace now with some of the recent updates has mitigated some.
I think some of the changes that you've seen now in regulation and potential removal of EV credits will continue to slow that pace of adoption down in terms of EV, which plays perfectly, I think, right into our core product set as a company. We do think this is a growth shoot for us, but we do think it will be a slower adoption, especially inside of North America for the foreseeable future, mixed probably inside of Europe. I think our view for the China marketplace, it continues to remain strong and will continue to remain strong. We're also launching a lot of our new EV product in the China marketplace as well. Hopefully that addresses your question.
Absolutely. Next question relates to your approach to adapting to the rapid growth of domestic Chinese automakers. At the conference last year, we asked all of the suppliers to please update us on their current exposure to domestic Chinese automakers and to outline their plans to increase that going forward. The only answer that was acceptable is they were doing anything and everything to, I say, attach their wagon, hitch their wagon to that star. I wanted to check in a year later. I mean, they've grown even arguably faster, taking even more share. Now there's all these headlines about, and this existed a year ago too, but more so now that they command very favorable pricing terms and even payment terms with suppliers, I think because everybody wants to align with them. They know that.
There was even a headline recently about the government asking automakers to sign a pledge to please pay their suppliers on a more standard basis, et cetera. What's your sense of the dynamic there? What's your approach to balancing the opportunity for growth with, at the same time, maintaining commercial discipline?
Yeah, no, great question. I'll start that in reverse. From a commercial discipline standpoint, it doesn't really matter what region of the world we're in, whether it's in the Asia markets, the North American markets, or the European markets. We're very focused on certain financial hurdles that we make capital investments for. We intend to keep that discipline in all regions of the world and all products, whether it be ICE, hybrid, or EV. I think maybe back a little bit on your question as it relates to the China marketplace. If I think about maybe to dimensionalize, as a standalone wholly owned entity we have inside of our China marketplace today, it was effectively started and launched on the back of Western OEM customers and products. Really since then, now we're close to about 60% where we supply into the local China market.
We've grown relationships with Chery and other companies inside that marketplace. As I mentioned in some of the EV commentary, we are now launching into several local OEMs for our e-beam axle applications. That book of business and our wholly standalone entity in China continues to grow, recognizing this is a growth market inside of China, but also potentially they could be exporting around the world. Staying financially disciplined in those awards continues to be top of mind. I think another interesting element, especially as it relates to our company, as you know, China in terms of our overall revenues today are about 5%. That's going to grow substantially with the combination with Dowlais. We are leveraged now into a very large joint venture in the China marketplace. It will serve many different customers that have also been transitioning from Western OEMs to now wholly owned local Chinese OEMs.
That book of business will continue to grow. Our own wholly owned will continue to grow in the China marketplace. We see that as a growth pool for us. They're going to export around the world. They're going to grow internally in their own markets. I think it's going to be an exciting time. We got the right product set for them. They're obviously interested because we're winning awards in that space.
To follow up on that, you know, because we have the quality NVH and the design engineering and they have aspirations to export, you know, we feel like we're in an excellent position in order to provide those levels of products that they seek.
Thank you. Turning now to Dowlais, which you referenced in your introduction, maybe you could take a moment to share from your perspective what you feel are the biggest strategic and financial benefits of the combination. What does it do for you from a geographic, customer, product portfolio standpoint and from a synergies perspective?
Yeah, no, look, this is a fantastic transaction for us as a company. As you know, as a standalone company, we're about $6 billion in revenues. We're going to double in size. We're going to have that size and scale to continue to compete in the global industry. We'll continue to compete as it pivots towards more electrification and hybrid application. Size and scale in the auto industry is incredibly important. This will continue to bolster our journey. From a few years back when we doubled up with MPG, we're doubling up again with the Dowlais acquisition. That puts us in a solid footing from a global footprint, from a global product perspective. It'll also continue to diversify our business. We are a driveline and metal forming supplier today.
We will couple on with the sideshaft business with Dowlais, which is the global leader in sideshafts, which is agnostic to EV vehicles, hybrid vehicles, and ICE vehicles. They command number one market share in the world. Really bolstering our driveline business is critical to our success and also bringing in some component businesses as well on their powder metal side. Diversification globally, diversification product, and diversification in addition will be the customer base as well. We'll now gain exposure deeper into Volkswagen, into Toyota, to really nameplates a standalone American Axle doesn't really enjoy here today. That's an exciting piece of it. A strong financial profile. You look at both companies, very profitable for both sides. We'll be cash flow generative and really couple that up with the huge synergy potential in this transaction. We've announced a synergy number of $300 million.
You put that together and we're one of the top margin performing in the business. We'll be one of the top cash flow performing in the business and we'll continue to have great growth pools going forward. A lot of great elements to this transaction. Those are some of the key highlights I'd share with you.
Maybe to follow up on the $300 million of cost synergies you mentioned, can you talk kind of across the three different buckets? You know, you got purchasing, SG&A, operations. How would you rate your relative confidence in the ability or visibility to achieving the targeted savings? Maybe looking back on the metal dyeing transaction, are there any lessons there that can be gleaned in terms of what might be harder or easier to achieve? I recall you increased the amount of targeted savings from a metal dyeing several times. Is that something that could happen here too?
Yeah, no, great question. Maybe we start with breaking down the $300 million and really what it comprises of. About half of that $300 million is associated with purchasing. Again, leveraging that size and scale of the business to attain purchasing savings through our supply chain. It's not just direct purchase buys in that purchasing number. We also have the opportunity to leverage that global footprint for logistics savings and also significant insourcing potential for the company. What do I mean by that? A standalone American Axle is the largest automotive steel forger in the world. Dowlais today purchases from the outside an incredible amount of steel forging. We have the opportunity for vertical integration and insourcing with that. In addition, we are a powder manufacturer in terms of components in American Axle .
Dowlais is one of the largest powder manufacturers and also manufactures the raw powder, which we buy from today. We have further vertical integration from the pure powder purchasing side inside of a combined company. Purchasing is about half of it. About 30% of it is associated with SG&A and public company costs and product engineering. I would put this maybe a little bit more in the classical bucket of pure synergy type of savings when we optimize the two businesses as we come together, leveraging a great installed engineering talent base, but also being able to optimize the spend in the engineering area will be critical to that success. Lastly, we have 20% associated with the operational side of the business. Think about operational efficiencies. Think about fixed cost optimization in terms of factory rationalization and other footprint type of elements there.
Quite frankly, that is one of the ones, while we're excited about it all, that one in particular we're extremely excited about. We had very little opportunity prior to the announcement of the transaction to get into Dowlais's factories and really assess how a common operating system across our $12 billion enterprise can drive optimization in our business, drive cost reduction. We are now starting to gain some access into their facilities and see this incredible opportunity. We think in front of us, leveraging a common operating system across the enterprise is going to yield some fantastic savings. That's the bucket we're most interested in terms of potential upside driving that going forward. I know you referenced a few comments that we did some uplift through the MPG side. Our focus right now is getting to $300 million.
Let's continue to get our head under the hood in terms of the operation side, and then we'll see where we go from there. We're excited.
Encouraging to hear. Thank you. When the Dowlais acquisition was first announced, you characterized it as being roughly leverage neutral with leverage roughly both 2.8x at the time of the announcement and at the date of closure. Of course, that comment was made in January with last reported 3Q 2024 financials. This was before all the saber rattling in February around tariffs, before the first Section 232 automotive sectorial tariffs announcement on March 26. With the industry having changed somewhat since then, with tariffs, the impact of tariff-related price increases on light vehicle production, what is the latest thinking in terms of leverage as of the combination date?
Yeah, certainly as a lot has happened in six months, that's for sure true. Look, when we announced the transaction back in January, our objective was to be approximately leverage neutral for the close, which we were projecting to happen at the end of this year. Since that time, we closed the year last year as a standalone company about 2.8x . We were 2.5x in the first quarter. We're continuing to drive the business. Both companies have sort of modified their full-year guides in light of some of the elements that you have, but we're still driving that towards our goal. Could we be a little tick or two higher than that potentially, but that's still our goal is to get into that zip code of approximately leverage neutral.
Obviously, with a little bit of the, I'll call it lower EBITDA due to the tariffs and some of the sales reductions that you've seen throughout the industry, it's a little bit of pressure on that, but we'll be pretty close.
Sticking with leverage, but looking beyond the period, on the call announcing the transaction, you touched on naturally being focused on obviously paying down debt post-transaction, but said too that, once you do get down to 2.5x or below 2.5x, I should say, that the larger and more diversified company could, at that point, maybe pursue a more balanced approach to capital allocation, whereas the standalone would have maybe continued to preference debt paydown. By what time do you think that American Axle might be in such a position, at 2.5x or so? What would be your preferred method of returning capital to shareholders? You haven't done a lot of that in recent years. Started to do a little repurchase before metal dying. You go back further, though. You used to pay a dividend.
I feel like the free cash flow is just so large as a % of the equity cap that you could just put a little bit of a floor on that, like, and then, how would you look to balance return of capital post 2.5x with the inorganic opportunities that you just can't seem to resist?
Okay, fair enough. Maybe start with sort of where we sit today as a standalone company and our philosophy on capital allocation has been very much continuing to focus on strengthening the balance sheet. Of course, that's after you make investments into the organic side of the business, funding CapEx and R&D, which, as you've seen, has turned into new business awards with a variety of different customers. We are very much overweight on our capital allocation to paying down our outstanding debt. I think we've paid down over $1.6 billion of debt since our acquisition of MPG. We articulated we were driving towards at least a 2x net leverage ratio before we sort of reprioritized, if you will, our capital allocation approach.
Now with the combination with Dowlais and some of the benefits of the transaction that we've talked about here, the strengthening of the size and scale and resiliency of the company in totality, not only from just its operational profile, but also from its balance sheet, we felt it was prudent at this point in time to rethink about our capital allocation priorities. While continuing to strengthen the balance sheet is still our number one priority in the near term, as you mentioned, we've articulated we'll continue to overweight that priority to where we're about 2.5x levered. It brings a much more balanced capital allocation methodology from that point to lower. What does that mean? It can come in a variety of different forms. You've asked, would we have dividends or buybacks?
I think it would be too early at this point to specifically call out a method, but it won't be exclusively on debt paydown as we've been over the last, call it, six to eight years. I think we'll have some flexibility there. We're excited to get to that 2.5x levered. You asked how long before you get to that. Think about it this way. When we, and if you look at some of our IR materials, we have a pro forma leverage on the company at a fully synergized basis at 2.5x. That gives a great indication that those synergies will drive deleveraging of the company. Obviously, they'll translate into cash flow as well. We talk about the synergy attainment, looking to get full run rate of synergies by the end of the third year. Why do I mention that?
That's giving you sort of that time dimension when we believe we can generate that full synergy benefits. You'll generate cash flow through that period of time. Through that period of time, you're going to start to get very close into that 2.5x leverage ratio based upon those specific facts.
Great, thanks. I know you've been frustrated by the multiple at which American Axle shares, up the other week, but you know, have traded at over time. I do not currently have an investment recommendation or rating on Axle shares, but when I did, I would often note about the very differentiated, you know, EBITDA multiple, and especially the free cash flow yield to equity versus peers. Various different reasons were offered for that over time, probably primarily the overlapping customer geographic platform concentration, which you've addressed organically and particularly inorganically with G M full-size trucks in North America going from 98% of revenue in 1994 to less than a third today, maybe less than a fifth after Dowlais. There were the worries over how the portfolio was positioned for electrification. You made tons of strides there. There was always too the financial leverage.
How are you thinking about the relative pressure from the on the multiple historically, currently, and going forward? How much has come from, you know, the customer and the geographic profile questions about, you know, the leverage to secular growth themes versus financial leverage? It seems like as you bat down these various concerns that investors have about geography, customer, platform, electrification, and the stock continues to trade at a low multiple, leverage is the one that remains. I don't know if you've sort of, you know, sensed that too, and you think, well, you know, that leverage can be fixed, you know, that can be changed, you know, whereas we got to focus on the strategic stuff first. What are you thinking about the leverage at the company longer term and the multiple at which, you know, investors might recognize the new company before and after deleveraging?
Yeah, look, clearly our trading multiple over the last several years has been very frustrating to us. There's no question about it. If our CEO is here, I think he would double down on that statement. We are where we are today. Our focus, as we thought about this combination with Dowlais, we think about what makes a great tier one supplier, which should in theory translate into great shareholder value and multiple type expansion. Leveraging size and scale and resiliency is key for us. We're doing that through the combination with Dowlais. Continuing to diversify and de-risk the business from a top line perspective, meaning customer and product, but also geography. We'll continue down that journey as well with the Dowlais acquisition. A strong balance sheet.
We talked about a little bit of our leverage profile, but the free cash flow generating power of this company, you look, we have some pro forma materials in our IR deck right approaching 5%+ in sales. That cash flow generating power will strengthen the balance sheet, but also then give us that flexibility to implement those capital allocation elements. Obviously, good earnings, great cash flow are a key recipe to this, which ultimately should translate into a very balanced capital allocation that we just spoke about. You put all these pieces together, we're focused on them. We're thinking that this transaction also brings and elevates our game, and each one of these pieces should translate into good opportunity for shareholder value going forward.
To follow up on that, there's a lot of seeds that have been laid down. I mean, from the time this closes to the glide path of when we get to this $300 million run rate, right? What you're going to see is these seeds starting to germinate, and it's going to come through our results. In my personal view, once these seeds start sprouting, then the street has to come back and say, okay, is this a half a turn? Is this a full turn? What is it on the valuation front? For us, it's a time for us to prove to Wall Street that we're going to deliver on all these aspects that we've promised or what we've put out as our goal with this combination.
I wanted to ask about the EV slowdown from a big picture perspective, its impact on American Axle, because I feel like for most of the companies we cover that, you know, the EV slowdown is a bad thing. You know, they've invested all this money, they're not going to see the growth that they thought, and the content per vehicle uplift is not as great. I think for a small subset of companies, and Dana's come right out and said that we're one of them, you know, and I haven't heard you exactly say, but is this not just a silver lining to the EV slowdown that ICE is around longer? Actually, you're a net beneficiary.
When you think about the paring back on R&D that you might be able to do, the paring back on CapEx, and then especially I was thinking when we saw with the big beautiful bill with the CAFE and the greenhouse, and then you look at GM's onshoring announcement, the $4 billion, they never said that they're putting the pickups in Orion Township. They never said they're taking them out of Silao. They never said they're taking them out of Oshawa Truck. Maybe the tariffs go away and they're just left with all this more capacity. We're like, how forward to increasing Super Duty capacity. That would be a great thing for you guys. What do you think? Is this actually a net positive?
Yeah, clearly in the near term, it's absolutely a net positive for us. You know, we made a decision a couple of years ago to be very selective in how we participated in the EV marketplace. We consciously did not overextend into large capital investments and massive amounts of R&D that we ultimately had to peel back. We were selected on certain targeted customers. I think we were successful in winning with some of those customers, whether it was JLR or Mercedes, now most recently Scout and some others. In terms of some of the near-term benefits associated with that, yes, we were able to take some of our spend down. For example, when we walked into this year, you look at our public guidance back that we issued in February, our R&D spend was going to go down $20 million.
That is a direct beneficiary of sort of the current environment as it relates to the slowdown in EV. You look at our truck franchise, which is about half of our book of business. As you know, we are a large supplier to Stellantis, to General Motors, and then more on a component basis, even to the Ford full-size truck franchise as well. That's going to be solidified for a very long period of time to come. These will be the last to electrify. Some of the things we're talking about here just bolster in terms of production and consumer interest for these vehicles. It's a great franchise to be on. We'll be around for decades. We think in the near term, absolutely. We do see growth shoots in some of the EV business as well, as you know, Scout's a great example of that.
Clearly, we'll leverage that installed asset base as it sits here today for a very long period of time. We had a strong cash flow profile in the last five years going through this. We'll continue to have a very strong cash profile going forward.
I wanted to check in on the competitive environment if there are any potential implications from Dana's sale of its off-highway business, just because I feel like in recent years, you know, they were much more interested in allocating capital toward their higher margin, you know, off-highway business, and all of their M&A was in that area and electrification side. Now they got a bunch of cash and return a lot of it. You know, they also talked about, you know, investing more organically and, you know, to support customers and just curious if they may be a little bit more focused on your wheelhouse.
They've been one of our prime competitors really for the history of our company in the light truck space. I think they got great product, great talent. I think as we do as well, we'll continue to be very competitive. We're not worried about it. We'll continue to earn our fair share and deliver great products to our customers. Not concerned.
I wanted to ask on bidding activity, your own awards and what, and I know you really only kind of quantify that once per year, but in terms of what you have announced, you know, what is the kind of look ahead to next January, February when you report? Also, about the industry overall, you know, what you're seeing there, because a lot of companies have reported that there's been a slowdown in requests for proposals. First, as automakers were grappling with what the consumers thinking about powertrain choices, and then as there was all the uncertainty leading up to what was going to happen with the regulation on EV subsidy and tariffs. Now we kind of know more. Curious if the result of that could be a flurry of bidding activity and how you might be positioned to compete there.
Yeah, I think our positioning will continue to remain strong holistically. If you think over the last really two years, all those elements that you described, whether it's the uncertainty on the EV, most recently on tariffs, really put, for a lack of a word, a little bit of an air pocket or a pause on some of the, call it, new vehicle launches the OEMs were pushing into the marketplace. It was very clear to us that they were assessing their product portfolios and how they wanted to compete and how they wanted to position themselves. At the same time, they were extending current programs, which, as you know, allows us then to leverage our installed asset base, become very profitable and cash flow generative on that, which ties a little bit into your prior question. At some point here, we're still working through the tariff place.
It's not done yet. I think the OEMs, our view is they're continuing to assess their final positioning. At some point, this will open back up in terms of new products, new segments from the OEMs, and you'll start to see this sort of rebirth in our view of this activity. I don't think they're there just yet. There's still quotation activity, but there's still a lot of focus on extensions and pivoting with the macro, whether it be tariff impacts or even to the same degree, the EV impacts here. We continue to win business. Like I said, Scout, we continue to actively quote on a billion dollars' worth of new business. About 75% of that is ICE and hybrid related. I think you'll see a little more activity in the hybrid space.
Holistically, you'll gain some traction, but at some point, this will open back up as they launch new vehicles starting into probably 2030 and beyond.
Okay, thanks. I wanted to ask about the potential for dispositions. You had that interesting move last year to sell your India commercial vehicle operation. It wasn't a huge transaction, but it was just interesting in that it was able to be sold for a multiple higher than what you trade at, which probably isn't too hard because you trade at a low multiple. I remember asking you on an earnings call at the time whether there might be more things out there within the portfolio business. You were like, you know, we're always open to it, but we don't, we're not, we don't know of any that are obvious. Now that you're bringing in all these other operations, and I think you did get disposed of some of what came with metal dying, right?
I just thought to ask as the portfolio broadens if there's anything that isn't totally core, just because it seems like it might not be too difficult to sell off a part of it in a value-accretive way that could also accelerate the leverage or lead to shareholder returns or something.
Yeah, evaluating our product portfolio is, I would say, a continuous event inside of our company. I think we were successful here over the last year. We took a couple of actions. We exited a joint venture out of China. We exited and sold our India commercial vehicle operations as we kind of doubled down our focus on light vehicle only. Those combined brought in nearly $100 million of cash proceeds into the company in the last 12 months. We continue that process on the standalone American Axle . There's probably some small things here or there we continue to evaluate and keep a close eye on. I would say nothing significant. Once we combine with Dowlais, obviously we'll continue that same exercise and thought process as it relates to our longer-term product portfolio interests.
If there's something to take action on, I don't think we'd be shy about it. At the moment, we obviously need to combine, get in, assess, look at our product portfolio, think about the growth pools inside of those individual elements in both businesses, and then make some decisions from there.
I've got more questions for these guys, but I thought I'd stop and see if there might be any in the audience. I'll come back to the audience after my next question, which is, we talked briefly about the G M insourcing decision, and they are not as large of a customer as they used to be, but you know, still very important. That's a very important program. Your margin on it tends to be disproportionately high. I just thought to ask if there's any risk or opportunity around that. I mentioned one of the opportunities is that when all is said and done, they're going to have more capacity for those vehicles. Is there any implication about where you might need to supply those facilities from? You know, it's expensive to transport your heavy products.
Does that entail maybe you might have to invest more somewhere else or that you might have excess capacity in Mexico or something? What's the thought process there?
Yeah, it's certainly fantastic, and you're referring to the GM full-size truck platform. It's certainly a fantastic book of business to be on. We're honored to be a part of it. It's a great product in the marketplace and high demand. I think in the near term, as they continue to bring on some additional capacity for reasons they've articulated, if you take another sort of layer down in their discussions, you hear them talk about putting on additional SUV capacity as part of this. Obviously, they've expanded the heavy-duty truck with Oshawa and Flint. These are, call it, sub-segments inside of that truck platform that have very high demand and potentially unlock some additional demand from their customers, which will drive obviously product from us to support growth in both of those segments themselves.
In terms of repositioning to support them, when they source us, they source the facility from which they want that supply. We'll work with them very closely as they build out their plans. They're still a couple of years out in terms of when they go to production for these products. We'll work with them very closely and do what we need to do to support them.
Any questions for these guys? Oh, one in the back, please.
Thank you very much for your comments. I wanted to touch on your people strategy going forward and just wondering how you're thinking about sort of the mix of people costs versus other costs and kind of the trend lines there. I know obviously you're a huge employer. Given the automation and investments you're talking about, how you're thinking about that in the future.
I think your question is, are we going to enhance our automation side of our factories? Is that sort of the underpinning of your question? Sure. Yeah, it's a very, it's an interesting balance. Some of the challenges, and if you follow some of our commentary over the last several years, as well as some commentary from others in our space and other industries, frankly, labor availability has been a challenge for us, right? We've been doing things to continue to attract labor. At the same time, we are going down not a separate path, but an additional path to increase automation in our factories and making investments there. It does a couple of things that allow you to continue to build. Obviously, it takes a little bit of the constraints of labor availability off the company. It also allows you to leverage efficiency inside of your factories as well.
Our goal, I think, would be to find, I would articulate it as a great balance between continuing to invest in our people, which we'll continue to do. That's the number one asset of the company. We will also continue to expand our investments in automation to create efficiencies, but also create capacity because of some of the labor availability challenges that we have. Labor availability challenges, it's a global issue. It's not just, for example, we've talked a lot about it in the U.S. context, but it's a global issue that we continue to invest in. Hopefully that addresses your question.
I'll lob in a final one, which is about vertical integration, the trend in vertical integration at automakers, and the impact on American Axle on both the ICE and the EV side, starting with ICE, where G M insourced roughly 35% of their full-size truck driveline capacity some years back. I think where they put that was in Arlington, where they're absolutely desperate for more assembly capacity. I don't know if that alters any of the dynamic. On the EV side, it just seems like when there was thought to be this big gold rush before the EV slowdown we talked about, there was this fear that if we don't have this anode capacity or this inverter capacity, this electric motor, that we're not going to have supply. We need to ensure continuous supply. We need to vertically integrate.
Anything that an automaker does is going to be more expensive than what a supplier does, right? Now it kind of seems like they might be prioritizing cost more as opposed to vertical integration. Just curious if that opens up addressable markets for the e-propulsion driveline products that you do supply.
Yeah, I mean, in terms of the ICE products, I think we're in a pretty good position with ourselves and our customers in that marketplace. From an EV perspective, it's a very, meaning, I guess, electric driving us as we think about it from our driveline business. Our component business will continue to supply. They'll supply OEMs that want to do this in-house. They'll supply other tier ones we supply ourselves. I think from a component business, we're in really great shape. From an e-drive perspective, we teased out a couple of years back, sort of our view when things were a little more EV-oriented in terms of our market share, our type of products. Inside of that, obviously, it's a very competitive space. Inside of that marketplace for us is this great niche called EV Maxles, where you do not see OEMs making investments. There's only limited competition.
If you think about all the EV wins that we've announced over the last couple of years, it's primarily been inside of this space. I think we'll continue to leverage that strength. It goes to the core of the company. It's also an area that appears OEMs don't want to make investments in. We can leverage and partner with them very closely. That's sort of been our approach to that market.
Interesting. Thank you. We are over time. Please join me in thanking Chris and David for all the great color and insight.