Southfield-based parts supplier will trim 4,600 workers because of slump in auto market.
December 20, 2008
Federal-Mogul Corp., the auto-parts supplier controlled by billionaire Carl Icahn, will cut 4,600 more jobs worldwide as automakers trim production because of dwindling sales.
Eliminating the positions, which are about 10 percent of the workforce, will cost $80 million through the end of 2009, the Southfield-based supplier said in a statement Friday.
The dismissals expand on 4,000 firings announced Sept. 17, which Federal-Mogul said would cost $60 million to $80 million. U.S. industrywide auto sales slid 16 percent through November, and Asian and European automakers including Toyota Motor Corp. and Volkswagen AG are paring output as demand falls.
"We continue to take actions in response to the ongoing significant downturn in regional markets and global industry outlook," Chief Executive Officer Jose Marie Alapont said in the statement.
Federal-Mogul employs about 47,000 people in 35 countries and gets 39 percent of its revenue from selling aftermarket parts that don't depend on purchases from automakers. It wasn't known how the cuts would affect local Federal-Mogul staffing. Calls to the company were not returned Friday.
The company was among several suppliers put on CreditWatch with negative implications in November by Standard & Poor's Ratings Services because of their ties to ailing automakers.
S&P singled out ArvinMeritor Inc., BorgWarner Inc., Cooper-Standard Automotive Inc., Federal-Mogul, Goodyear Tire & Rubber Co., Hayes Lemmerz International Inc., Johnson Controls Inc., Lear Corp., MetoKote Corp., Shiloh Industries Inc., Stoneridge Inc., Tenneco Inc. and Visteon Corp. for their exposure to General Motors Corp., Ford Motor Co. and Chrysler LLC.
American Axle & Manufacturing Inc. and TRW Automotive Inc. already were on CreditWatch.
"We're going to see a thinning of the herd," said Mike Wall, an auto supply analyst with Northville-based CSM Worldwide, said last month.
Federal-Mogul's third-quarter revenue was up $6 million to $1.69 billion, and its $5.55 billion in year-to-date sales was a record, Alapont said in October. Net income for the quarter fell 71 percent to $4 million, down 4 cents a share, from $14 million a year ago.
Federal Mogul, which was in Chapter 11 from 2001 until the end of 2007, used the reorganization to restructure its global footprint and consolidate operations.
A restructuring plan that began in 2006 led to the closure of 20 plants and seven distribution plants around the world, 15 of them in North America.
Federal-Mogul's manufactures largely power train products, which are split about 60-40 between original equipment and aftermarket customers, and virtually every player in the automotive landscape is a client, as are some in the marine, railroad and aerospace industries.
On Friday, Federal-Mogul shares rose 18 cents to $4.28 in Nasdaq Stock Market composite trading. The shares have lost 86 percent of their value this year.
Detroit News Staff Writer Alisa Priddle contributed to this report.
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