TOLEDO, Ohio – Auto parts maker Dana Corp. (DNC) filed for bankruptcy protection for its U.S. operations on Friday, joining a growing list of suppliers forced to make major restructuring moves because of the slumping U.S. auto industry.
Dana, which makes brakes, axles and other parts, has been in a downward spiral since the company announced last fall that it was restating earnings and lowering its profit forecast for 2005 because of accounting errors.
The auto supplier with 46,000 workers worldwide said in January that it lost nearly $1.3 billion in the third quarter last year while realigning its business.
The company said it filed for Chapter 11 protection so it could fix financial and operational problems. The filing was entered in the U.S. Bankruptcy Court for the Southern District of New York.
"The general financial condition of the industry, together with Dana's inability to renew or expand its credit facilities in a timely manner, has significantly constrained Dana's liquidity," the company said in a statement.
Trading of Dana's stock was halted on the New York Stock Exchange just before the announcement. Shares fell 37 cents to 67 cents Friday before trading stopped. The stock had been as high as $17.03 in the past year.
The filing does not affect the company's businesses in Europe, South America, Asia, Mexico or Canada, the company said.
Auto parts suppliers over the last year have been sandwiched by rising energy costs that have driven up the costs of raw materials and driven down demand for gas guzzling sport utility vehicles and pickup trucks.
Delphi Corp., the nation's leading parts supplier, filed for Chapter 11 bankruptcy protection in October. Visteon Corp., the nation's second biggest auto parts supplier, is closing three plants and putting another six up for sale under its restructuring plan.
Suppliers say the restructuring moves also are being forced by automakers increasing pressure to sell them parts at lower prices.
Before the filing, Dana announced plans last year to cut its salaried work force by 5 percent, close three plants in North America and Australia and sell parts of its business to sharply reduce costs.
Dana Chairman and Chief Executive Officer Michael Burns said Friday that the company will move forward with its restructuring plans.
Dana in December lowered profits by $44 million for a period starting in 2000 and ending in June. The changes were caused by improper accounting for customer pricing increases and supplier reimbursement costs in the company's commercial vehicle unit, Dana said.
The U.S. Securities and Exchange Commission earlier this month said it was opening an investigation into Dana's financial practices and whether the company violated federal securities laws.
The company that began as Spicer Manufacturing Co. took on its current name in 1946. Dana in 1998 bought axle and brake maker Echlin Inc. in what was one of the biggest mergers in the auto parts industry. The move increased its overall employment to 79,000 workers.