LONDON - English components supplier GKN PLC will move production from the United States, Germany and Spain to low-cost countries such as Poland and Slovenia in a bid to boost profits.
The company recently announced a 10 percent rise in half-year pre-tax profits to $396 million.
But the automotive division's contribution to overall company earnings fell from 57 to 52 percent. GKN compensated with improved profits from the company's helicopter operations and industrial services.
Encouraged by a strong North American market, GKN aims to double North American sales over the next four years, but it will export components from cheaper manufacturing countries to gain a cost advantage.
The changes will see some GKN Spanish production moving to Slovenia, where wages are at least 20 percent below the levels of Western Europe. Meanwhile, the Zumaya plant near San Sebastian, Spain, will start supplying North America.
Production at GKN's plant in Poland, which also has a low wage rate and currently concentrates on local Fiat supply, will be expanded to other automotive product lines.
As part of the plan, GKN, which already has shed 600 jobs in Europe this year, will close four sintering plants in the United States and Germany to reinforce consolidation.
Under Chief Executive C.K. Chow, who took charge in January 1997, the group has spelled out its ambitions for the automotive division's powder metallurgy operations. The sintering process is less labor-intensive than casting or forging, and parts are 20 percent lighter.
Over the past two years, GKN Sinter Metals has acquired two major U.S. powder metal suppliers: Sinter Metals, for $534 million, and Interlake, for $529 million.