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ROCHESTER HILLS, MI-DURA Automotive Systems Inc. is undertaking a restructuring plan that will impact more than 50% of the company's worldwide operations either through product movement or facility closures. DURA will complete this action by year end 2007, execs said Thursday.
During a conference call summarizing DURA's restructuring plan and earnings results, Larry Denton, chairman and chief executive officer, said the company is evaluating the sale of manufacturing operations located in Lage, Lippstadt and Rotenburg, Germany. He went on to say the company will expand its low-cost locations, namely its Mexico and Eastern European facilities, while closing five to 10 undisclosed locations throughout the world. Plant closures will result in the displacement of 2,000 jobs worldwide.
The plan, which includes employee severance, capital investment, facility closure costs and product move costs, is expected to result in a $100-million cash savings. The savings are expected primarily through a lower average global wage rate, lower cost of purchased materials and operating efficiencies gained as a result of the facility consolidations and reorganizations.
The company also reported revenues of $564.4 million for the fourth quarter ended Dec. 31, compared to $582.8 million in the same year-ago period. Net income for the quarter was $10.3 million, or 54 cents per diluted share, compared to net income of $1.9 million, or 10 cents per diluted share, during the same period a year ago. The decrease in fourth quarter revenues is attributed to lower North American automotive production by the domestic OEM's and the negative impact of foreign currency exchange. Partially offsetting these decreases was the strength of the recreation vehicle industry.
"2005 was another in a recent series of challenging years in the automotive industry," said chief financial officer Keith Marchiando. "Two of our key customers, General Motorsand Ford,lost market share in North America at a pace greater than anyone expected. Global pricing pressures continued to be intense and raw material prices continued to be at cyclical highs. These factors have impacted DURA's results for 2005 and pose great challenges in the near term."
Despite meeting expectations, Denton commented that the "results are not acceptable and we need to continue to focus our efforts on changing DURA going forward." Denton went on to say that while the company has made progress toward achieving its organic growth and worldwide cost leadership goals during the past three years, the company is not moving fast enough. "We must accelerate our growth and profitability enhancement plans to meet our strategic goals by 2008," Dura said.
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