Suppliers prepare for deeper cuts in 2002

The cuts automakers are making in overhead and production are rippling through the supplier industry.

Delphi Automotive Systems Corp. is planning job cuts beyond the 11,500 already initiated this year. Other large Tier 1 suppliers such as Visteon Corp., Continental AG and Dana Corp. continue to trim expenses.

Parts makers have slashed jobs and shuttered facilities this year. Ford Motor Co.’s ongoing restructuring and the end of 0 percent financing create the potential for more adjustments in 2002.

“We probably could have picked a better time to become a Tier 1 supplier,” Visteon Chairman Peter Pestillo told analysts Nov. 30. “ ... There is no question that 0 (percent) financing is going to mean a reduction in sales and production for next year. The only question is how much and to what extent it hits, and how soon.” Pestillo has forecast 2002 production of less than 15 million vehicles.

Visteon has cut 3,500 jobs, or 4 percent of its work force, this year through severance and attrition. One Visteon executive has said that more temporary or permanent layoffs may be needed. A company spokesman said no announcements are planned, but leaders will give more guidance on 2002 in January.

Other supplier actions include:

  • Delphi sent its 17,100 salaried U.S. employees a letter on Monday, Dec. 3, seeking voluntary departures effective Jan. 1, Feb. 1 or March 1. If not enough workers volunteer for the retirement and buyout incentives, Delphi plans to fire people. A company spokesman wouldn’t reveal the targeted number of jobs, but more details could emerge today, Dec. 10, during briefing for analysts, investors and media.

    The cuts are in addition to 11,500 announced in March. Delphi also said it would continue the suspension of its 401(k) savings match, and suspend a tuition payment plan that offered $1,250 per dependent child annually.

  • Continental AG said Thursday, Dec. 6, that it will close a Traiskirchen, Austria, tire factory in 2002. Nearly 1,000 jobs may be cut. Factories in Sweden and Mexico and another 3,000 jobs also may be in jeopardy, European news organizations reported.

    The German supplier trimmed 10 percent, or 200 positions, from its U.S. salaried work force in early November. Discretionary spending and hourly temporary workers also have been reduced in response to the market downturn, a company spokesman said. Continental told suppliers it is planning for 2002 North American production in a range of 15 million to 13.8 million vehicles.

  • Dana Corp. said last week that restructuring costs will total $445 million after taxes, with 65 percent being taken in the fourth quarter and the rest in 2002. The company will combine its engine systems and fluid systems business units and roll its off-highway axle manufacturing operations into its commercial vehicle systems axle unit.

    In October, Dana said fourth-quarter job cuts could approach 12,000 and operations at more than 30 plants would be closed, consolidated or outsourced.

  • You can reach Amy Wilson at awilson@crain.com

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