DETROIT -- Hayes Lemmerz International Inc. said Friday it is reorganizing its divisions, cutting 45 positions and slashing wages by as much as 7.5 percent in the United States and temporarily suspending the companys contribution to its 401(k) plan.
Hayes, which makes wheels, brakes, powertrains and suspension systems, said its reorganization efforts are expected to create annual cost savings of $35 million.
In an interview with Crains Detroit Business, Hayes CEO Curtis Clawson said the actions are necessary because Hayes largest U.S. customers are losing market share, which is causing Hayes sales volume to decline. Clawson is taking a 10 percent salary cut.
It is our hope and intent that much of the benefit reductions that we are announcing will be temporary, Clawson said. We think that as the impact of some of the restructuring items take hold that the company will be much healthier in the second half of 2006 and into 2007.
On Friday, Hayes announced:
- It will reduce several of its employee wage and benefit programs, primarily at its U.S. locations, which includes reducing base-pay up to 7.5 percent for U.S. employees. Plus, the companys board will take a 20 percent reduction. Clawson said the wage cuts will affect about 3,000 of Hayes 10,000 employees. Hayes only has one plant in the United States that is unionized. That plant is in Akron, Ohio, and its employees are not affected by the wage cuts, he said.
- The suspension components and automotive brake and powertrain divisions will be consolidated into a new division called Automotive Components Group. Hayes said this consolidation will allow it to cut its corporate and business unit staff by 45. Daniel Sandberg was appointed president of the new group.
- The realignment of its wheel division, announced in January, already has resulted in a reduction of over 15 percent of its staff in the U.S. during the first quarter of 2006.
- The aluminum-wheel-manufacturing facility in Huntington, Ind., will remain open through the second quarter of this year but will then close, affecting about 185 jobs.
Also, on March 31, Hayes announced an amendment to its $625 million senior secured credit facility that the company said favorably modifies its agreement with lenders.
Hayes said it expects 2006 sales to be about $2 billion, down from about $2.3 billion for the fiscal year that ended Jan. 31, mostly due to a reduction in sales volume in North America.
Clawson said the companys financial performance should improve this year for two reasons: Hayes is gaining market share overseas and the restructuring actions should reduce expenses in the United States.
Hayes plans to announce full fiscal 2005 results on Tuesday, April 11.
Hayes Lemmerz International Inc. ranks No. 64 on the Automotive News list of the top 100 global suppliers with estimated fiscal year worldwide original-equipment automotive parts sales of $2.0 billion in 2004.