American Axle & Manufacturing receives tax break for $133m investment in Michigan facility upgrades, after site prioritised over facility in Mexico
Tier one supplier American Axle & Manufacturing (AAM) has received a tax exemption from the Michigan Economic Development Corporation (MEDC) for its investment of $132.9m into upgrades at its facility in Three Rivers, Michigan. The site was chosen for expansion over AAM’s facility in Mexico in 2021.
An MEDC announcement on October 28, 2025 confirmed that AAM has received approval for a five-year, 100% State Essential Services Assessment (SESA) exemption – an estimated value of up to $978,960.
The SESA is a special assessment in the state of Michigan, which applies to eligible manufacturing personal property that is already exempt from local personal property tax. To qualify for an SESA exemption, projects must involve an investment of $25m or more in eligible manufacturing personal property.
“These investments are necessary to ensure our plant infrastructure and advanced manufacturing processes remain competitive while supporting our highly skilled workforce to meet the strict requirements of our OEM customers,” said Tolga Oal, president – driveline at AAM.
Oal added: “We appreciate knowing that when we’re making multi-year investments in physical and human capital, we’re doing so in a location where we can count on partnerships that are necessary to sustain and grow our Three Rivers Manufacturing Facility to compete successfully in this dynamic, ever-changing industry.”
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Local reports claim the investment will go towards new machinery and upgrades to the site’s roof, HVAC system and wastewater treatment system, as well as interior and exterior renovations.
“The $132.9 million investment American Axle & Manufacturing is making in its Three Rivers facility is an incredible win for Southwest Michigan,” said Jonas Peterson, CEO of Southwest Michigan First. “This commitment will position the plant and community for long-term success. By designating Three Rivers as its Center of Excellence, AAM is not only elevating the facility’s capabilities but also shining a spotlight on the extraordinary talent and craftsmanship of our regional workforce.”
In 2021, the Michigan site was prioritised over AAM’s facility in Mexico for upgrades. This earlier investment of $38.6m involved the installation a new production line, creating 100 new jobs, over half of which being filled by “low- to moderate-income persons”. This investment, much like the 2025 one, was deemed eligible for an SESA exemption, valued at up to $468,888.
In a Q2 2025 earnings call in August, David Dauk, chairman and CEO of AAM, addressed the topic of reshoring and the impact of US tariffs on this trend. “We are receiving several inquiries from many of the global OEMs that are looking to localise production capability or component capability to the US to address the tariff issues that are out there,” he stated. “That’s positive for us in regard especially for our metal forming business unit.”
With AAM’s Oal identifying the importance of meeting the requirements of the company’s OEM customers, demand from OEMs for suppliers to localise components to the US is a strong driver to take such action.
This follows a trend of tier suppliers investing in localised production in the US, further fuelled by recent tariff pressure. For example, in 2024, ZF Friedrichshafen invested $200m to launch US production of powerline commercial vehicle transmissions “to supply three major US commercial vehicle manufacturers”.
Other examples of this trend include BorgWarner’s $42m investment into the expansion of its battery pack production facility in Seneca, South Carolina in 2023 and Bosch’s $260m electric motor production investment in Charleston, South Carolina – announced in 2022 – as well as Bosch’s proposal to build its largest silicon carbide (SiC) semiconductor factory in Roseville, California, which was announced at the end of 2024.
Speaking at Automotive Logistics & Supply Chain Global in 2024, Ana Lucia Ochoa Lorenzini, then global director supply chain management in the Metal Forming division of AAM, said that closer collaboration with supply chain partners and investment in the latest software were key to consider when managing network volatility.
