If you have the equipment to do it.
Narrowing a housing, you need to have some way to get it straight. I make a fixture from bar stock. With donut spacers cut to fit the center carrier bearing saddles. Also the outer bearing housing. A steel plate to clamp to each end of housing. Then the housing is cut to dimension. Spacers installed and bar inserted. Tack weld prepped housing in three places, each end. Bar should turn easily. Then weld housing.
Axles are a different matter. If the axle isn't tapered too much from flange to spline and there is enuff diameter to spline. It can be cut and re-splined.
I used to do these in house. But the PIA factor and the toughness of most axles. I send them out to Moser in Indiana. Moser Engineering - Moser Engineering - Home