Auto parts supplier ArvinMeritor Inc. said today it would close 13 plants and cut 2,400 jobs in North America and Europe as part of a restructuring plan expected to cost $325 million.
The Troy-based supplier of automotive components said it will close nine plants in North America and four in Europe, although so far it has only identified one in Frankfurt, Germany.
The company said an additional 400 jobs will be cut globally as part of consolidations, bringing total job reductions to 2,800. But Carsten Reinhardt, a senior vice president of ArvinMeritor and president of its commercial vehicle systems, said in a conference call about 800 positions will be created in what he called “low-cost sites,” such as those in Mexico and Eastern Europe.
ArvinMeritor has 27,500 employees in 26 countries.
The job restructuring announcement comes as ArvinMeritor reported weak performance for the fiscal 2007 second-quarter on low volumes in the North American market. The company recorded a loss from continuing operations of $94 million, or a 19 cents a share, compared with earnings of $45 million, or 46 cents a share, in the same period a year earlier.
The company also announced plans to freeze the defined benefits plan for about 3,800 ArvinMeritor employees starting in January 2008.
Sales from continuing operations were $1.6 billion for the three-month period ended March 31, which was essentially the same as the year-ago period.
“While second-quarter results did not meet our expectations, we are pleased with the substantial margin improvement in our Light Vehicle Systems business as our new leadership team becomes fully integrated and the initiatives identified through our Performance Plus program begin to take effect,” said Chip McClure, chairman, chief executive officer and president of ArvinMeritor, in a statement.
“We have committed significant resources to building a more focused and profitable business model for ArvinMeritor and we anticipate improved results in 2008 and beyond," McClure said.
ArvinMeritor said it is freezing its defined benefit pension plan for salaried and non-represented employees in the United States effective Jan. 1, 2008. The change will affect about 3,800 employees, including some who will continue to accrue benefits for an additional transition period ending June 30, 2011.
The company said it will make additional contributions to its defined contribution savings plan on behalf of the affected employees, after the freeze dates have passed.
Officials said the amount of the savings plan contribution will be based on a percentage of the employee’s pay, with the contribution percentage increasing as the employee ages. These changed do not affect current retirees or represented employees, according to the company.
The sales outlook for the remainder of fiscal 2007 was adjusted to a range of $6 billion to $6.2 billion, versus a previous estimate of $5.9 billion to $6.1 billion. Projections from continuing operations for the year are expected to be in the range of 70 cents to 80 cents a share, which is down from an earlier estimate of $1 to $1.10 a share.
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