American Axle chairman issues stern warning to U.S. automobile industry.

The U.S. auto industry is facing a moment of truth and must act now in a coordinated effort to assure its survival, says Richard Dauch, chairman and CEO of American Axle & Manufacturing.

"The moment of choice for the American auto industry is at hand," Dauch said in a speech before

That competition is flexing its muscle and is draining the life out of Detroit.

For the first time in 40 years, General Motors, Ford and Chrysler are simultaneously losing market share, despite heavy incentives for consumers. In the past six years, the Big Three's share of the U.S. auto market of 17 million vehicles has declined from 73 percent to 60 percent. During that time, Japanese automakers have increased their share by 17 percent; Europeans by 52 percent; and Koreans by 72 percent. "The ships are passing in the night," Dauch said. "This is not a cyclical change. It is a harsh and real structural change. And it has been accruing quickly right before our eyes."

Over the past 10 years, U.S. OEMs have closed Eagle, Plymouth and Oldsmobile. "There is a message here folks," said Dauch. Things could get a lot worse, he warned. "The Big Three and its key partners are in trouble."

Evidence of this trouble is the "massive shift" taking place in sourcing parts and components to low-labor-cost countries overseas. General Motors expects to increase its annual parts purchases from China from $3 billion in 2003 to $10 billion in 2009. Ford is expected to source $10 billion a year in parts from China by 2010. Chrysler's purchases from suppliers in China and Korea are expected to top $6 billion by 2010. "That is another $26 billion of goods and services and jobs flowing away from our present sourcing pool in the next five to six years," Dauch pointed out.

Over the past three years, the industry has shed 190,000 jobs; 30 percent of which came from the OEMs and 70 percent from suppliers. "Stop and think about it for a minute," Dauch told his Detroit audience. "If that data trend for jobs remains constant, the impact will be staggering.... We have all been forewarned, therefore, it is time to be forearmed."

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Automotive investment in China last year alone topped $30 billion.