Dana is a supplier of axles and
driveshafts to the Jeep Grand Cherokee. Through mid-October, production of the sport-utility was off 31.1 percent from year-ago levels, to 171,890 units.
Then there are Ford's big pickups and sport-utilities, for which Dana supplies various combinations of frames, axles and driveshafts.
F-Series output is off 14 percent this year, the Expedition/Navigator is off 30.9 percent and the Excursion is down 53.7 percent.
The falloff in all those platforms exceeds the 12.4 percent decline in North American car and truck production this year.
Such declines were a big reason behind Dana's 16 percent decrease in sales and an $8 million loss in the third quarter. In the year-ago quarter, the Toledo, Ohio, supplier earned $61 million.
Heavy trucks hit hard
But Dana's troubles go beyond the light-truck market. Dana, which ranks fifth on Automotive News' list of global suppliers in 2000, draws about 11 percent of its sales from the struggling heavy-truck market. Another 25 percent comes from the automotive aftermarket, which also is hurting.
"It's really some of these other businesses that they've diversified into that are hitting them harder," said Kenneth Blaschke, an analyst for Deutsche Bank Alex Brown Inc. in San Francisco.
Dana's commercial vehicle systems sales for the first nine months of the year totaled $878 million, a 33 percent decrease from year-ago levels.
Dana doesn't expect the outlook to change soon. "Indications are that 2002 production of both light vehicles and commercial vehicles may be significantly lower than 2001 levels," said Dana Chairman Joe Magliochetti in a statement. "This more negative outlook was a critical factor in our decision to pursue the more aggressive actions we are undertaking."
Those actions are:
1. Sell Dana Commercial Credit Corp.
2. Cut the global work force by more than 15 percent.
3. Close, consolidate or outsource operations at more than 30 plants.
4. Reduce the quarterly dividend to one cent per share from 31 cents per share.
Except for the sale of the credit business, these restructuring actions will occur in the fourth quarter. Dana expects to take an after-tax charge of as much as $450 million, most of it in the fourth quarter.
More job cuts
Job cuts, which could approach 12,000, will be spread throughout the globe. But 75 percent of Dana's employees are in North America. These cuts follow the estimated 10,000 jobs the supplier has eliminated since spring 2000.
In addition to the production cuts, Dana is feeling the effects from a contract it lost six years ago.
In 1995, Magna International Inc. won the right to produce the frames for GM's big pickups and sport-utilities. Nearly 1 million are produced annually, and those products have been some of the strongest on the market.
Offsetting such losses is new business, such as a Dana contract to supply steel frames for Chevrolet's Colorado pickup. It will replace the S10 in the 2004 model year.