Profits fell 6 percent for American Axle & Manufacturing Holdings in the third quarter, hit by a slowdown in vehicle production and rising steel prices, the company said Thursday.
"Lower (profit) margins reflect higher costs of purchased metal commodities," chairman and chief executive Richard E. Dauch said in a conference call with analysts.
Profits were $36.4 million, or 68 cents per share, down from $38.7 million, or 71 cents per share, a year ago. The results matched Wall Street's expectations, according to Nelson Information/Thomson Financial.
Sales shrank 3 percent, to $841.6 million. Vehicle production in North America was off 1 percent in the period, while General Motors light-truck production -- an important source of business for American Axle -- was off 5 percent, Dauch said.
The Detroit-based auto parts supplier is a significant manufacturer in Western New York, employing about 2,100 production workers at plants in Buffalo, Cheektowaga and the Town of Tonawanda.
The slowdown in the auto sector has fueled fears of layoffs, but so far the job count at the components maker is stable, a United Auto Workers official said.
"It's still holding its own right now," said Kevin Donovan, UAW Buffalo area director. There are about 90 workers on temporary layoff from the Tonawanda forge and another 65 to 70 from the Buffalo gear and axle plant, he said, adding that he expects any further reductions will be modest.
Asked by analysts how American Axle will control labor costs, Dauch said that the company is increasing productivity -- the amount of output per hour worked -- by about 8 percent a year.
"We have great labor stability. We have an excellent workforce," he said. The autoworkers and Machinists unions signed new labor contracts within the past year, following a brief strike by the UAW.
American Axle confirmed its profit outlook for the full year of $3.40 to $3.50 a share, excluding a special charge of 28 cents per share for debt refinancing in the first quarter. The profit outlook was reduced in September from the previous level of $4 a share.
Agreements with customers and suppliers will limit further metal price increases in coming months, Dauch said. The axle maker is the largest consumer of special quality bar steel in North America, he said. That, combined with long-term supply contracts from automakers, give the company more leverage with metal suppliers than its competitors, he said.
The axle maker continues to reduce its dependence on former parent GM, Dauch said. Sales to non-GM customers grew 5 percent to $175.1 million in the quarter, representing 21 percent of total sales.
"We will continue to experience profitable sales growth to companies other than GM," he said.