DETROIT – Visteon Corp., (VC) the nation's second biggest auto parts supplier, plans to close three plants and put another six up for sale under a restructuring plan announced Wednesday that could affect up to 23 of its facilities worldwide.
It is the second major restructuring in two years for Visteon, the former parts division of Ford Motor Co., (F) which transferred another 23 North American facilities back to Ford last year in an effort to avoid bankruptcy.
Under the new restructuring plan, Visteon plans to close plants in Monterrey, Mexico, and Rio Grande, Puerto Rico, in the first quarter of this year. It plans to close a third plant in Buffalo, N.Y., in the third quarter, although around 70 customer service and engineering employees at the Buffalo plant are expected to keep their jobs, Visteon spokesman Jim Fisher said. It also plans to transfer 100 jobs from its plant in Swansea, Wales, to Ford.
Visteon didn't release the total number of employees who could be affected. Visteon has around 15,800 employees in North America, including 11,000 hourly workers at 35 plants. The company has a total of 50,000 hourly and salaried employees at 170 facilities worldwide.
Visteon Chairman and CEO Mike Johnston said Visteon's North American doesn't expect significant cuts in its salaried staff of 4,800. Visteon already cut 1,000 employees through voluntary buyouts last year, he said. He didn't elaborate on other planned cuts.
It made the announcement at a conference for auto analysts in Dearborn, Mich.
In addition to the closures, Visteon said it is trying to sell six plants and would give more details as talks progress. The company said it's working with 12 plants to transfer work to other facilities or close out product lines.
Johnston said the changes will allow Visteon to concentrate on its profitable product lines: climate control systems, electronics and interiors. It also will help Visteon achieve its goal of reducing its manufacturing operations in North America and Western Europe, which have higher labor costs, in favor of facilities in Asia, Eastern Europe and South America. Visteon said that in 2005, 36 percent of its manufacturing employees were working in high-cost countries. It wants to lower that to 25 percent by 2008.
Don Stebbins, president and chief operating officer of Visteon, said the steps may seem incremental, but "it does show that we are serious about turning things around here at Visteon and tackling each opportunity to improve our business."
For the first nine months of 2005, Visteon lost $1.6 billion. It hasn't turned a profit since it was spun off from Ford in 2000. It has been hit hard by production cutbacks in the ailing domestic auto industry, which is grappling with rising health care costs, sluggish sales and declining market share to foreign carmakers.
Johnston said the three-year restructuring plan will cost approximately $800 million. Around $550 million will be reimbursed by Ford under the restructuring agreement signed last fall. Ford has placed most of the Visteon plants it took back into a holding company and is trying to sell them.
Visteon, which is based in Van Buren Township near Detroit, said Ford accounted for a little less than half of Visteon's business in 2005, followed by Hyundai Motor Co. and Nissan Motor Co.
Visteon shares fell 15 cents to close at $6.67 on the New York Stock Exchange. It shares have traded in a 52-week range of $3.14 to $10.91.
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