AAM leads in the whole world in designing and manufacturing driveline systems and forged products for trucks, passenger cars and buses. It has twelve thousand associates and covers manufacturing space of seven million square feet. It has seventeen facilities for manufacturing that are located in Brazil, United Kingdom and United States. It aims at excelling in its business and has high quality products that have ISO/QS certifications.
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The chief executive officer maintains the business in United States. After AAAM resourced their business from competitors who were doing it in china, Mr. Dauch said that he will do it in Michigan because everybody was dealing with Detroit.
In l994 Mr. Dauch led an investor group and bought American Axle which was owned by general motors and had guaranteed business but later encountered problems because the equipments were outdated, the products were old and workers were not trained well in the jobs that were assigned to them.
Sequential Development of Quality Management
AAM invests on people through education and training. Its associates are taught skills necessary for manufacturing high quality products. Formal education is also necessary in order to be better educated, more flexible and productive work force with skills that are enhanced to achieve profitable growth.
They focus in excelling in management, manpower, measurement, material, methods and machinery to give customers solution in manufacturing and engineering and maintain ISO900l/QS9000 certification.
In the first quarter of the year 2007, it had sales amounting to $802.2 million due decrease in volume of production for full size truck. This was 9% decrease in production compared to first quarter of the year 2006. it had 4% sequential increase in volume of production in comparison with first quarter of the year 2006, this was an increase from $l,205 in2006 to $l,252 in 2007 as a result of the AAM content appearing on the winning of awards of pickup trucks.
This enable it to be known to most of its potential customers who were willing and able to purchase most of its products because most people participated in the winning of awards and were able to know about AAM better and the good quality products it offers. There is an increase in gross profit from $21.3 million to 84.8 million and its operating income and net earnings per share was $ l5.4 million.
The earnings in the first quarter of 2006 was $ 8.6 million which increased to $l5.4 million in the year 2007. This is as a result of special charges and $2.9 million non-recurring costs. In the year 2006, earnings were favoured by $3.l tax adjustments that were used to settle tax liabilities.
In the year 2007 there was reduction in structural costs for special programs and restructuring actions. The main aim of AAM is to gain profit and get more cash flow in the year 2007 and at the same time reduce the level debt, strengthen balance sheet and enhance value of stockholders.
During the past nine years AAM had an average of 8% growth annually. It has challenge from its competitors in countries that pay low wage in sustaining good quality products and technology. AAM products are low cost because its workers are more productive because they are assigned jobs that they are best fitted and more qualified. The workers are experienced because they have worked for AAMfor a long time and the employee turn over is low.
AAM products are of high quality compared to competitors in countries that pay low wage. In order to generate revenue of $ l000, AAM requires 3.8 hours compared to l994 when it required l0 hours to generate revenue of $l000. Detroit produced l900 axles everyday while under GM in the year 2004; it ships 4600 axles everyday without increasing production space and far better quality. In the past nine years, AAM has improved quality and saved GM $250M warranty costs.
The actual result in the quality in the quality of products is different the statements that are being worked on because the market experience changes in economic conditions where the purchasing power of money may be affected if the currency looses value and political instability for example if the country is having general elections.
Sometimes the demand for products may be low and this will make producers reduce the volume of their production for example the light truck produced by GM and the heavy duty of Daimler Chryslers. Sometimes, work is stopped at the programs of GM which lead to reduction in products purchased by the customers.
The Structure of Quality Systems
Aam has increased its backlog by $400million to $l.2billion for the year 2008 to 2012 programs. It measures backlog by value of annual sales by agreeing with customers to provide axles and other products and there are awards for large volumes. There are assumptions made such as estimation of volumes of production, change in launch of programs and fluctuation in exchange rate of foreign currency.
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The company efforts have been successful in expansion of product portfolio by increase in applications for all wheel drive. 75% of new business is sourced to non-us facilities. The awards will increase use of low cost and high quality facilities and use of facilities for manufacturing that are of flexible in changshu and guanajuato.
The awards lead to creation of new facilities and markets where the products are sold in large quantities. Half of business supports cross over vehicles and rear wheel drive and in the year 2008, two thirds of the business will be launched and begin operations. AAM earned award for supplying axle for the program of new global vehicle. It has earned award from cherry automobile to produce rear-drive modules. The ratification of local operating agreement is announced and they will be employed at the facility of ll5000 square foot.
There will be operations on forgings at Tonawanda performed by suppliers who ensure that customers get the products that they need within their reach at a specified period of time. In summer, there will be hiring of l20 work force and the wages of machine workers will be compared with machining industry. This will be result of hard work, commitment and teamwork of UAW and AAM officials.
The new wage structure is fair where workers are paid according to their performance without favour or discrimination. The wage is equitable and is based on financial investment which AAM has committed by establishing operations in newyork.AAM partners with UAW to operate solid business with highly skilled and flexible workers.
Differences in Quality Between Aam Manufacturing Industry and Airline Company
AAM manufacturing industry uses patents in order to protect the products they have invented. This will help them make sure that, the companies that produce similar products with AAM do not make use of the technologies they have come up with in producing their products. In the airline company, they make sure they offer quality service to their customers by offering good hospitality and charging affordable costs to their customers in order to attract and retain them in their company.
AAM manufacturing industry uses trade mark in their goods for their customers to be sure that the goods they are purchasing belongs to their industry and for them to be able to identify the specific products that they require while Airline company do not make use of designs that have registered trademark.
AAM manufacturing industry is protected by product innovations that prevent their products from being imitated and also make sure no fake products are sold to customers making them believe that they belong to AAM while Airline Company is protected by process innovation.
Both AAM manufacturing and airline company respond to changes in technology differently because each one of them uses different technology. They are different in their supplies and the price of raw material used by each of them varies. Both of them have different competitors and they look for means to make sure that they are able to be the most competitive.
Both of them encounter different risks and ways and means of diversifying their risks are different. One may decide to engage in high risk high return investment while the other one may be engaging in low risk low return business. This means that the revenue generated by the manufacturing and Airline Company is different.
The Implication of Quality Management in Aam Manufacturing and Airline Company
Quality management opens AAM manufacturing and Airline Company to competition; here good quality products attracts many customers. It enable the company to do business and make huge profit because the goods offered for sale are better than the ones offered by firms that offer similar goods and services. Quality management will enable labourers not to be dislocated because when, when they have experience in areas where they can work well, they will remain there and continue being productive.
The internal transport will be opened to foreign investors who will be interested in purchasing goods and services because of the good quality. This will also help in transferring modern improved technology in both management and in other operational techniques to the benefit of the firms.
Traditional norms will be developed and laws for the reasonable functioning of markets in order to enjoy the benefit of competition by offering better goods than competitors in order to increase sale and generate huge amount of revenue which can be ploughed back to the business for expansion. The firm will achieve high percentage growth and continue with business to the foreseeable future.
Quality management of AAM manufacturing and Airline Company will enhance the change of services offered at national and provincial level and aid in deregulation of aspects used for enterprise control. The services offered will be the ones that satisfy consumers needs at all levels. The level of development required in all provinces will be known and taken care of by the AAM manufacturing and airline company.
AAM manufacturing and Airline Company ensures that they change the governments role both the central and local government for the government not to take control of their business in any other way apart from in taxation and setting rules and regulations which are necessary for any firm to start its operations for example, licensing.
Drucker, P. (2007); Management: tasks, responsibilities and practices; transaction publishers.