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Mar-29-2009Johnson Controls To Close 10 Plants; Cuts Auto Outlook(topic overview)
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The company also said it expects to realize a return to profitability in the third and fourth quarters of fiscal 2009, with the run rate for its unit specializing in automotive interiors projected to break even by the end of the fiscal year ending Sept. 30. Johnson Controls said it doesn't expect having to resort to further restructuring activities for the foreseeable future -- it had announced a $495 million restructuring program during the fourth quarter of fiscal 2008 -- even while revising lower its forecast for vehicle production. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said Stephen Roell, chairman and chief executive. [1] The company said it will incur an estimated pre-tax charge of $200 million to $215 million in the second quarter. Johnson Controls said it expected a return to profitability in its fiscal 2009 third and fourth quarters, with its Automotive Experience business expected to achieve a break-even run-rate by the end of the fiscal year. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said Stephen Roell, chairman and chief executive officer of the company.[2]
The U.S. Treasury pledged up to $5 billion (U.S.) in aid last week to provide immediate liquidity to ailing suppliers. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength," chief executive Stephen Roell said in a statement. Johnson said it would take a pre-tax charge of up to $215 million in its second quarter ending March 31 due to the latest restructuring plan, partially offset by about $75 million in one-time tax benefits. The company said it still expects to return to profitability in its third and fourth quarters. Its shares dropped 36 cents to $12.54 yesterday and have lost almost two-thirds of their value since hitting a 52-week high last May.[3]
The time frame now is for all the downsizing to be complete by 2010, and the company said it does not foresee a third round of cuts. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength," JCI Chief Executive Officer Stephen Roell said in a statement. The supplier still expects to return to profitability by the second half of its fiscal year that ends in September. It posted a $608 million fiscal first-quarter loss in January. The company said it will take the charges in its second fiscal quarter, which ends on Tuesday, and report earnings for the quarter April 21.[4]
Johnson Controls said it expects the most recent restructuring effort to be complete by 2010. The company, which posted a $608 million fiscal first-quarter loss in January, said it expects to return to profitability by the second half of its fiscal year ending September. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength," said Johnson Controls chief executive Stephen Roell. The Associated Press contributed to this article.[5] The company said the restructuring is currently two-thirds complete. The restructuring is meant to deal with the markedly lower demand that car makers and their suppliers have had to deal with since the recession began. Americans have virtually stopped buying new cars in favor of used cars and spending money to fix cars they already own. Johnson Controls said it expects vehicle production in its 2009 fiscal year to be 8.8 million units in North America and 14.3 million units in Europe, below its forecast in December 2008 of 9.3 million units in North America and 16.2 million units in Europe.[6] DETROIT (Dow Jones)--The global automotive recession appears to be deepening after Johnson Controls Inc. (JCI), a bellwether of the parts making sector, cut its auto production forecast and said it will close 10 plants. The Milwaukee-based company now expects North American light vehicle production to fall another 500,000 vehicles to 8.8 million vehicles during its fiscal year ending Sept. 30. The company also cut its European forecast another 12% to 14.3 million units.[7] DETROIT, March 27 (Reuters) - Auto interiors and battery maker Johnson Controls Inc (JCI.N: Quote, Profile, Research ) said it would close an additional 10 plants and cut more jobs than planned as it expects no near-term recovery in global auto production. Johnson Controls, the third-biggest auto parts supplier in North America, said it had completed two-thirds of its restructuring announced at the end of 2008, which included shutting 21 plants and reducing 9,300 jobs, or 7 percent of its global workforce.[8] DETROIT-Auto interiors and battery maker Johnson Controls Inc. said it intends to close 10 more plants and cut more jobs than planned because of the continuing bleak outlook in global auto production. North America's third-biggest auto parts supplier said it has completed two-thirds of its restructuring announced at the end of 2008, which involved shutting 21 plants and reducing 9,300 jobs, or 7 per cent of its global workforce.[3]
MILWAUKEE (WKOW) -- Milwaukee-based manufacturer Johnson Controls says it will cut jobs and close 10 plants as part of a restructuring effort. Most of its plans focus around its auto parts supply business and the company says it's their way of coping with widespread cuts to global vehicle production.[9] Auto-parts supplier Johnson Controls ( JCI Quote - Cramer on JCI - Stock Picks ) plans to cut jobs, close 10 manufacturing plants, and record an estimated second-quarter pretax restructuring charge of $200 million to $215 million as it battles a slump in vehicle production.[10] MILWAUKEE -- These are nervous times at Johnson Controls, made more nerve-wracking with today's announcement of another major restructuring at the firm. They plan to close 10 more plants worldwide in their automotive parts division, and lay off more workers. They have 3 plants in Holland, and 1 each in Battle Creek and Grand rapids, and in towns all over Michigan where they specialize in heating systems and interior parts. It's part of a 200 million dollar restructuring triggered by widespread cuts in global vehicle production.[11]
Johnson Controls announced Friday, March 27, it will cut jobs and close 10 plants as part of a restructuring effort that will cost $200 million to $215 million.[12] MILWAUKEE (AP) — Johnson Controls Inc. said Friday it will cut jobs and close 10 manufacturing plants as part of a restructuring effort that it said will cost between $200 million and $215 million.[13] Any jobs cuts that would occur locally as a result of Johnson Controls most recent restructuring effort would be minimal, the company said Friday. Johnson Controls is cutting jobs and closing 10 manufacturing plants as part of its $200 million to $215 million restructuring effort.[14]
For the second time in less than a year, Johnson Controls will cut jobs and close factories in an attempt to limit losses. Friday, the Milwaukee-based company announced that it would begin an effort to restructure its operations, with plans to "return to profitability" in the third and fourth quarter of fiscal 2009. Among the initiatives the company intends to complete in 2010, Johnson Controls said it plans to reduce its workforce and close 10 manufacturing plants.[15] The company's automotive experience business expects to achieve a break-even run-rate by the end of fiscal 2009, while Johnson Controls affirmed that it expects a return to profitability in the third and fourth quarters of fiscal 2009. These restructuring activities also target the company's power solutions business, where focus would be on optimizing manufacturing capacity to reflect lower overall demand for original equipment batteries amid lower vehicle production levels.[16] Existing users, please login at the top of the page. Summary: Vehicle interior and battery specialist Johnson Controls on Friday said it would book an additional pre-tax restructuring charge of US$200-$215m for its fiscal 2009 second quarter but expected a return to profitability in its third and fourth quarters with its interiors business expected to break even by the end of the fiscal year.[17]
The charge, to be taken in the company's second quarter ending March 31, would be partially offset by about $75 million in non-recurring tax benefits, the company said. It affirmed it expects to return to profitability in its third and fourth quarters. It expects vehicle production this year to be below its December 2008 forecast levels at 8.8 million units in North America and 14.3 million units in Europe.[18] Johnson Controls said it now expects vehicle production in 2009 to be 8.8 million units in North America and 14.3 million units in Europe, weaker than the company's forecast in December 2008. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said Stephen Roell, chairman and chief executive.[19] The company had announced previously that it expected tax benefits in the second through fourth quarters of fiscal 2009 to total $150 to $200 million. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said Stephen Roell, Johnson Controls chairman and chief executive officer.[20] The maker of automotive interiors has neither specified which plants will be closed nor the number of employees that will be fired. JCI is expected to incur a pre-tax expense of $200 million to $215 million for this restructuring initiative during the third and fourth quarters of fiscal 2009. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said chief executive Stephen Roell. Analysts have pulled back on estimates for this Zacks #3 Rank ("Hold") stock.[21]
The Milwaukee, Wisconsin-based company noted that the latest round of restructuring activities would see workforce reductions and closure of 10 manufacturing plants. These restructuring activities would result in an estimated pre-tax charge of $200 million to $215 million in the second quarter of fiscal 2009, of which 80% is associated with the company's automotive experience business.[16] Company management didn't disclose the locations of the plants that will be closed or the extent of the job cuts but did reveal that the restructuring activities will result in an estimated pre-tax charge of $200 million to $215 million in the fiscal second quarter.[20] The timing of Friday's announcement came just four days before the end of JCI's second quarter, to prepare investors for an expected loss when the company reports results Tuesday. Friday's cuts come on the heels of a $495 million restructuring plan detailed six months ago, when the company said it would cut 7 percent of its worldwide workforce. That plan, still underway, closes 21 plants and cuts 9,300 jobs.[22]
In the statement announcing the restructuring, Johnson Controls said the restructuring was intended to address losses as a result of lingering problems for automakers in North America, Europe and Japan. Anna Tims, a spokeswoman for Johnson Controls, said the company cannot yet publicly identify which plants will close or how many workers will lose their jobs as a result of the restructuring. She said the company has not yet completed the process of notifying affected workers and oversight organizations in Europe. The latest round of job cuts and plants closures comes in the wake of similar restructuring activities launched by Johnson Controls in September 2008, also to address shortfalls in its automotive component business[15] CHICAGO (AFP) — Automotive equipment manufacturer Johnson Controls said Friday it would close 10 factories, making an unspecified number of job cuts, to weather the deep slump in auto sales worldwide. The company based in Milwaukee, Wisconsin, said the moves would "further align its cost structure with global automotive market conditions." The overhaul will require the company to set aside 200 million to 215 million dollars in its 2009 second quarter.[19] Johnson Controls is not only company that has been forced to adjust to a downturn in the national automotive industry. Locally, both automotive dealers and parts manufacturers have had to cut positions and, in some cases, shut down their operations. In December, Key Plastics said it would close down operations and cut 24 jobs at its Manchester Township plant, because of strife in the automobile industry.[14] Grand Rapids Press File Photo Despite recent cutbacks, Johnson Controls employs 2,800 in the Holland area. HOLLAND -- As local officials awaited word this morning about factory closings by Johnson Controls Inc. -- one of the Holland-area's largest employers -- mixed reports surfaced about the likely location for those cuts. Holland and Holland Township officials said this morning they have not been warned by Johnson Controls Inc. of any plant closures within their borders. According to Bloomberg News, most of the 10 plants Johnson Control Inc. expects to close will be in Europe, and an estimated 4,000 workers will lose their jobs.[23] Johnson Controls Inc. must cut more jobs, and Michigan plants may be among the 10 manufacturing operations to be closed as part of stepped up restructuring efforts announced Friday.[4] At the end of 2008, Johnson Controls announced a $495-million restructuring program with cost reduction initiatives, which it said are about two-thirds complete and ahead of schedule. It expects to complete this latest round of restructuring in 2010, and does not expect any further restructuring activities in the foreseeable future. It did not say how many jobs it expected to cut as part of the restructuring. Reuters content is the intellectual property of Thomson Reuters or its third party content providers.[18] Johnson Controls plans to shut 10 plants and cut jobs as part of a restructuring plan.[24] Johnson Controls Inc. announced today that its restructuring in the second quarter will result in the company closing 10 plants and eliminating an unspecified number of jobs, but the company's Milwaukee area operations will likely be spared from the cutbacks.[2] A statement released by Johnson Controls didn't identify which 10 plants it would be closing, but said that an annualized basis, North American production in the March quarter was at a 27-year low. It was the second major restructuring announcement from Milwaukee-based Johnson Controls in the past seven months. In September it announced a restructuring to reduce its manufacturing output. The announcement is the latest in a string of automotive supplier troubles that led to the Treasury Department unveiling its Auto Supplier Support Program last week which will provide up to $5 billion in financing.[25] Johnson Controls Inc. (JCI) announced its second broad-based restructuring in six months and again cut its expectations for North American and European auto production.[26]
The majority of the restructuring involves Johnson Control's Michigan-based automotive business and targets excess manufacturing capacity resulting from lower industry production in the European, North American and Japanese automotive markets, according to the company.[20] The company anticipates completing the latest restructuring activities in fiscal 2010, with expected payback of one-and-a-half years. These restructuring activities primarily focus on the excess manufacturing capacity at automotive experience business resulting from lower industry production in the European, North American and Japanese automotive markets.[16]
"Today's announcement demonstrates our continued ability to improve our cost structure. Earlier this month, we completed a debt offering that significantly improves our liquidity and gives us the flexibility to take advantage of opportunities that may arise as a result of the economic environment." The company also affirmed that it expected a return to profitability in its fiscal 2009 third and fourth quarters, with its automotive business expected to break even by the end of the fiscal year.[20] The latest downsizing, which will impact the company's automotive interiors business, follows a $495 million restructuring announced in the fourth quarter of 2008. The company projects that these initiatives will return it to profitability by its fiscal third and fourth quarters, and allow its interiors business to achieve a breakeven run rate by the end of 2009.[27]
The restructuring effort will finish by 2010, company officials said. JCI, which posted a $608 million fiscal first-quarter loss in January, could return to profitability by the second half of its fiscal year ending in September. Jeff Gras, owner of Zeeland-based Out-Linz, worked at JCI (once Prince Corp.) for 25 years before his position was recently cut. He understands the point of the layoffs, but feels for his former co-workers who are unsure if they will have a job. "It's unfortunate to see people leave," he said, noting the company has cut down to bone instead of just the flesh.[12] The efforts are meant to cope with widespread cuts to global vehicle production. Johnson Controls Inc. expects to return to profitability by the second half of its fiscal year.[28] Johnson Controls' announcement Friday marks the second recent restructuring effort at Johnson Controls, which has been hit hard by the downturn in global vehicle production.[14]
Johnson Controls said it expects the most recent restructuring effort to be complete by 2010. It does not foresee any further restructuring efforts.[14]
Jagler said that can lead to questions around the world. "By having every town that has one of your plants speculating, wondering, fearing that the plant in their town is going to close," Jagler said. Johnson Controls expects to finish its restructuring plan next year.[24] Johnson Controls Inc., which has a 180-employee plant in Battle Creek, announced a company "restructuring plan" which would result in the closure of 10 of its plants.[5] A Tillsonburg auto parts plant expects to be spared after Johnson Controls Inc. announced it is shutting down 10 plants.[29]
Johnson Controls, a supplier of batteries and interior components to almost all auto makers, will spend as much as $215 million to close the plants and trim an undisclosed number of jobs.[5] Even last week's $5 billion in Federal aid wasn't enough to keep tier one automotive supplier Johnson Controls from initiating a restructuring program under which it will close 10 of its plants around the world.[25]
Of the plants in the U.S., 32 are right here in Michigan, two in the Lansing area. Johnson Controls partially owns this JCIM plant and Bridgewater Interiors plant in Delta Township. Both plants employ more than 100 workers and make interior parts for GM cars. While we don't know the impact of the announcement on Lansing, company officials say these drastic moves will make them a stronger supplier - and they hope to be thriving again by the end of the year.[30] Johnson Controls freed up cash through a debt offering completed in mid-March, that Roell says provides the company the "flexibility to take advantage of opportunities that may arise as a result of the economic environment." He didn't specifically refer to acquisitions, but the auto parts supply market may soon be flooded with bargain-priced assets -- a recent Grant Thornton report identified more than 500 auto suppliers that are at risk for near-term bankruptcy -- and Johnson Controls has shown it isn't afraid to pursue distressed deals.[27] The company manufactures auto parts, batteries and building systems. "We aren't building as many cars or commercial buildings and those are the two sweet spots for Johnson Controls, so it was only a matter of time before the slowdown in those sectors trickled down to the parts suppliers," said Steve Jagler of the Biz Times Milwaukee.[24]
Darryll Fortune, a spokesman for Johnson Controls, said 80 percent of the restructuring charges will affect the company's automotive segment.[14] The latest move is expected to be the last downsizing "in the foreseeable future," Ponczak said. About 80 percent of the cutbacks will be in the automotive side of the company, including its battery business. By taking the charge of up to $215 million in the current quarter, JCI anticipates its next two quarters will get back into the black. "This event has really pushed suppliers to think very hard about their business, very strategically," auto analyst Erich Merkle said Friday, of the steep global drop in auto production.[22] In a news release early Friday, JCI said auto production hit a 27-year low, driving down demand for parts from suppliers across the board. JCI latest forecast is 8.8 million vehicles produced annually in North America, down 500,000 from its estimate just three months ago. In Europe, the company lowered its outlook by 12 percent, to 14.3 million units.[23] U.S. auto sales plunged about 40 percent in the first two months of 2009 to nearly 30-year lows. The Milwaukee-based company forecast vehicle production this year at 8.8 million units in North America and 14.3 million in Europe.[8]
A steep, rapid drop in auto production in Europe is creating JCI's troubles there. Its forecast in December proved off by 12 percent in the European market, where production fell from 16.2 million to a pace of 14.3 million in just three months. The company was off on its North American forecast, too, but by only 500,000. It revised its December expectation of 9.3 million autos produced down to 8.8 million stateside.[22]
While the North American downturn took 18 months, Europe auto production dropped in a sickening six-month dive. JCI has 250 automotive plants worldwide, and nearly half of its 2008 sales came from that sector.[22]
For the most part, the company's Milwaukee area plants are dedicated to the firm's power solutions business and automotive battery business, which will not be affected by the restructuring, Ponczak said. Most of the company's North American automotive operations, which manufacture parts such as seats, doors and control panels, are located in Michigan.[2] Only 25 percent of the restructuring will have an impact on the company's North American operations, and 80 percent of the plan will affect the firm's automotive parts business, Glen Ponczak, the company's director of investor relations, told BizTimes Milwaukee.[2]
The company said 80 percent of the restructuring charges announced Friday will affect the company's automotive segment. It said will take the charges in its second fiscal quarter, which ends on Tuesday, and report earnings for the quarter April 21.[13] The debt offering completed in early March was a sale of 6.5% convertible notes due 2012 for an aggregate total of $852.5 million. The company announced in the fourth quarter a $495.0 million restructuring program that would provide cost reductions across all three of its businesses: automotive, building efficiency and power.[6] The restructuring will cost the company between $200.0 million and $215.0 million in the second quarter, but will be slightly offset by a nonrecurring tax benefit of $75.0 million. "While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins," said Chairman Stephen A. Roell. "Earlier this month, we completed a debt offering that significantly improves our liquidity and gives us the flexibility to take advantage of opportunities that may arise as a result of the economic environment."[6] The company currently expects the about $75 million non-recurring tax benefit in the second quarter to partially offset the restructuring charges.[16]
Johnson Controls had announced previously that it expected tax benefits to total $150 million to $200 million in the second, third and fourth quarters of fiscal 2009. [16] The firm, which has operations worldwide for seating as well as auto interiors and technology, did not indicate which factories would close but said the changes would result in "workforce reductions." The company said that it expected a return to profitability in its fiscal 2009 third and fourth quarters.[19]
The restructuring initiatives would result in pre-tax charges in the second quarter of fiscal 2009 and is expected to be completed in 2010.[16] The Milwaukee-based maker of auto parts and building systems did not say how many employees will be affected or which plants will close. It says it will take the charge in its fiscal second quarter ending this month.[28] The Milwaukee-based maker of auto parts and building systems is not disclosing how many employees will be affected or which plants will close, spokeswoman Debra Lacey said.[12]
In West Michigan, JCI employs 2,800 at four major sites, including a technology center and auto interiors plants, in Ottawa County. Its subsidiary, JCIM, runs the Southview plant in Holland and a former Plastech plant in Kentwood. That heavy focus on auto parts is likely to pull West Michigan's JCI workers into the fray, said Mike Wall, an auto analyst with CSM Worldwide in Grand Rapids. "I think it's inevitable that there will be some vulnerability there," Wall said.[22] The Grand Rapids Press A Johnson Controls plant on Douglas Avenue in Holland Township on Friday morning. HOLLAND -- The need for Johnson Control Inc. to negotiate with European work councils before closing plants there drove it to leave out crucial details in its latest cutbacks Friday and rattle the nerves of its West Michigan work force. In an interview with The Press, Glen Ponczak, director of investor relations for JCI, said several of its 10 plants set to close are in Europe. That does not mean sites in the U.S. will go unscathed.[22] The future of Johnson Controls Lakewood plant in Holland Township is unclear, but township officials said they hope a recent multi-million dollar purchase of new equipment for the facility shows the company's commitment to the area.[12]
Johnson Controls has 16 automotive parts production plants in Michigan, including one in Battle Creek at 76 Armstrong Road.[5] Johnson Controls, which makes automotive parts and building climate-control systems, operates plants locally in Geneva and Sycamore.[15]
Johnson Controls Inc. (NYSE:JCI) on Friday said it will lay off more workers and shutter 10 plants as part of an ongoing reorganization.[27]
Johnson Controls announces major cuts due to the downturn in auto sales, and some local plants could be on the chopping block.[30] Lisa LaMotta, 03.27.09, 02:35 PM EDT Auto supplier aims to cut its way to profitability. Johnson Controls thinks it has found a short-cut around Detroit's business pile-up. The auto-components maker is expanding its cost-reduction program with the hope of being profitable in the second half of this year.[6] HOLLAND -- With 80 percent of Johnson Control Inc.' s latest cuts coming from its automotive business, its Holland sites are sure to take a hit, auto analyst Erich Merkle forecast Friday.[31]
"Johnson Controls and the other suppliers are having to align themselves with cuts in auto production," said Stephen Spivey, an automotive analyst at Frost & Sullivan in a Bloomberg article. "The industry is going to get smaller and it's going to stay that way for awhile." He doesn't rate the stock.[25]
Karl Dehn, president and chief executive officer of local economic development firm Battle Creek Unlimited, said Friday that BCU "was not aware of anything related to a Battle Creek closure." In 2005, Johnson Controls invested $118 million on site and technology improvements at its operations in Battle Creek and Holland, rather than move production to competing locations in Ohio and Mexico.[5] Through a joint venture with Paris-based Saft SA, Johnson Controls in February announced it would supply the battery system for Ford Motor Co.' s (NYSE:F) first series production plug-in hybrid electric vehicle.[27]
Shares of Johnson Controls opened the trading day lower Friday, losing 1.7%, or 22 cents, to $12.68, showing investors have little faith that the company can deliver on its promises of profitability.[6] Johnson Controls bought the former Prince Corp. in 1996 for $1.35 billion. JCI stock was trading at $12.69 a share this morning, down 21 cents in morning trading on the New York Stock Exchange.[23] Johnson Controls (nyse: JCI - news - people ), the maker of automotive interiors, is the latest casualty of the demand draught.[6] Based in Wisconsin, Johnson Controls (NYSE: JCI) is a provider of automotive interiors, batteries and facility management systems and services.[20]
For one, Johnson Controls is a diversified manufacturer. In addition to its battered car interiors business, the company also manufactures HVAC, fire and security systems for nonresidential buildings, and automotive batteries. That latter business has been buoyed by the manufacturer's investment in lithium-ion batteries.[27] The local Johnson Controls is a hub for the company's building efficiency business unit. Its parts for automobiles are made elsewhere.[14]
The Glendale company is reacting to the recession, which has been particularly brutal to the automotive and commercial real estate sectors, which comprise the bulk of Johnson Controls' markets.[2] Johnson Controls has a plant in Tillsonburg which makes foam for automotive seating.[29] Lacey said Johnson Controls would soon begin making announcements on which plants and how many employees would be affected by the closures.[5] In 2005 Johnson Controls closed another plant in Tillsonburg which produced headrests and employed 94 people.[29]
The supplier launched restructuring efforts in September. At that time, the plan was to save $495 million through plant and job cuts. This second round of cutting comes as the initial restructuring is about two-thirds complete. [4] In September, the company announced a $495 million program of plant closures and job cuts, which it said is now two-thirds complete.[14]
The new wave of cutbacks expands $485 million in closings and job cuts announced last fall.[23]
The cutbacks announced early Friday will cost $200 million to $215 million in JCI's second quarter ending Tuesday. Eighty percent of its latest cuts will be in the troubled automotive sector.[23] "The numbers work a little bit in our favor from that perspective," Wall said. JCI employees around the globe received an e-mail from company executives early Friday, alerting them to the plan for cuts that will cost up to $215 million this year.[22]
The restructuring effort is expected to be finished by 2010 and could cost up to $215 million.[9] The actions reflect lower overall demand for original equipment batteries resulting from lower vehicle production levels. The second-quarter impact of the restructuring is expected to be partially offset by an approximately $75 million non-recurring tax benefit.[20]
The moves will cost between $200 million and $215 million and are necessary because of the continued downsized projections of auto production levels for 2009, the supplier said in a release.[4] Auto production is racheting down as sales wane, and another tough month ends Tuesday. He'll be happy if North American production hits 9 million units this year. This time last year, the pace was 14.8 million.[31] On an annualized basis, North American production in the March quarter stood at a 27-year low, the company said.[1]
The company has not announced which plants would close, but said 25 per cent of the cutbacks would come from North American operations and the rest from Europe.[29] The company, which is one of the world's largest makers of components for automobile interiors and a manufacturer of heating and air-conditioning systems, said Friday it will close 10 plants and eliminate an undisclosed amount of jobs.[26] MILWAUKEE -- Job cuts and plant closures are planned for a large Milwaukee-based company.[24] Bloomberg News reported that about 4,000 jobs will be cut, with most of the affected plants being in Europe while other analysts say the cuts will be from Michigan jobs. Holland Township supervisor Terry Nienhuis said his last contact with JCI was during a Dec. 18, 2008 township board meeting.[12] Last year about 70 jobs were eliminated at the plant when a third shift was cut.[29]
Johnson Controls declined to comment how many jobs it planned to cut in addition to the 9,300 positions, or where most of the reductions would take place.[8] Johnson Controls said it does not expect any further restructuring activities in the "foreseeable future."[20] Johnson Controls Inc. ( JCI ) will close 10 manufacturing facilities and further reduce its workforce as it copes with a worsening downturn in the auto industry.[21] Shares of Johnson Controls fell 36 cents, or 2.8 percent, to close at $12.54 Friday.[13] Shares of Johnson Controls rose 26 cents to $12.90 on Thursday but fell about 3% ahead of Friday's opening bell.[1]
It's always sad to see businesses leave Holland. This one seemed doomed when Prince left the company and Johnson Controls took over.[22] The remaining roughly 20 percent will come from the company's power solution division, which is not tied directly to Johnson Controls' York County hub.[14] "So over 35 percent of our suppliers are financially distressed and on the verge of bankruptcy," Johnson Controls President Keith Wandell said on Dec. 4, 2008.[24] When cars aren't selling, the automakers struggle and so do the auto suppliers. Johnson Controls is just the latest supplier to be hit in this bad economy.[30] Johnson Controls supplies parts to almost every major auto maker, including GM, Toyota, Honda, BMW and Hyundai.[3]
MILWAUKEE - March 27, 2009: Johnson Controls, Inc. (NYSE:JCI) will report earnings on April 21, 2009 as its second quarter ends on March 31, 2009.[32] Johnson Controls is the global leader that brings ingenuity to the places where people live, work and travel. By integrating technologies, products and services, we create smart environments that redefine the relationships between people and their surroundings.[32] While the CEOs of the big three automakers appeared before Congress pleading for money, Johnson Controls president warned of a domino effect.[24]
"Johnson Controls is one of the best-run auto suppliers out there. They're trying to position themselves for profitability going forward."[22] The Milwaukee-based auto supplier announced Friday that it would be closing 10 plants and making layoffs in an effort to return to profitability for the second half of 2009.[6] The auto supplier consultant suspects the former Plastech plants that the company operates, which includes the Southview Plant in Holland, may be affected. "When JCI took over the Plastech plants, they said they weren't going to keep them all running," Stephens said.[12] JCI announces it will close 10 plants, mostly in automotive - Holland, MI - The Holland Sentinel Your browser either has JavaScript disabled, or does not support it.[12] The company, whose products include automotive parts, batteries and building systems, did not say how many employees will be affected or which plants it will close.[14] About 80 percent of the restructuring charges will affect the company's automotive segment. It is unclear as to which local plant will be affected if any.[12] The company said 80 percent of the restructuring plans announced Friday will affect the company's automotive segment.[5]
The company, which announced belt-tightening late last year, said it does not expect any further restructuring activities in the foreseeable future.[19] The company expects to finish the restructuring in 2010. The company says most of the actions will affect its auto parts supply business.[28] The company has 140,000 employees and more than 1,300 locations, WISN 12 News reporter Patrick Paolantonio said. The company said its auto parts supply business will be affected the most.[24]
No details of which plants or how many employees were revealed, but the ratio of cuts could be gleaned from the company's news release.[22] In Kentwood, deputy administrator Rich Houtteman said city officials had not been notified of any changes at the JCIM plant on Talon Court. He read about the JCI cuts Friday, and said the lack of details for the restructuring was unnerving for workers and others in the community.[22] The restructuring includes unspecified workforce reductions and the closure of 10 manufacturing plants expected to be completed in 2010 with a planned payback of 1.5 years.[17]
The Milwaukee-based chain announced the shutdowns yesterday as part of $495 million restructuring which should be completed next year.[29]
Management pointed out that it completed a debt offering "that significantly improves our liquidity and gives us the flexibility to take advantage of opportunities that may arise as a result of the economic environment." The company pegged net proceeds from the sale of convertible senior notes and equity units earlier this month at more than $828 million.[1] In a statement, chairman and chief executive officer, Stephen Roell said, "Today's announcement demonstrates our continued ability to improve our cost structure. Earlier this month, we completed a debt offering that significantly improves our liquidity and gives us the flexibility to take advantage of opportunities that may arise as a result of the economic environment. Both of these actions provide further competitive advantage."[16]
The company is stepping up cost cuts in response to a deepening economic downturn. [8] The company said once the latest downsizing is complete, it does not expect to have to make further cuts.[23]
Just minutes later, the Milwaukee Journal reported the bulk of the cuts will hit JCI's Michigan-based auto seats and interiors business. That's what JCI makes in Holland.[23] JCI has 2,800 employees in the Holland area, with plants on Lakewood Boulevard in Holland Township, the Southview plant on Washington Avenue and Waverly Road technical center in Holland. "We are waiting any additional word where these 10 locations might be," Holland Mayor Al McGeehan said. "In the past, they have been very, very good about communicating with us. They have been extremely professional and even contacted us prior to a public announcement."[23] JCI would not say how many employees will be affected or which plants it will close.[4]
"Given that the (Battle Creek) plant is one of the most technologically advanced plants that exists within the company and the industry, it would be surprising to see it close," Dehn said.[5] The Geneva plant at 300 S. Glengarry Drive is part of the company's battery group and employs more than 300 workers.[15]
There's still a long way to go in figuring out what the market needs are." JCI is shutting down plants to try to keep its remaining ones running at a brisk rate, auto analyst Wall said. "The big key for suppliers right now is leveraging as much plant capacity as possible," he said.[22] As the global automotive recession deepens, another major auto parts supplier is scaling back.[5]
The company also is implementing restructuring initiatives in the company's Power Solutions business, which supplies automotive batteries.[20] JCI officials said the company does not foresee any further restructuring efforts.[12]
Shares of JCI fell 36 cents, or 2.8 percent, to close at $12.54 Friday on the New York Stock Exchange. [22] A new subsidiary, JCIM, also owns three former Plastech plastic-injection-mold plants in the Grand Rapids area. "It shouldn't surprise anyone, given what's happened in the automotive space," Merkle said.[31] One unsettling fact is no surprise. Eighty percent of the impact will be in its automotive sector, the division with four Holland-area plants.[31]
SOURCES
1. UPDATE: Johnson Controls Shutting Down 10 Plants
2. Johnson Controls' plant closures won't include Milwaukee - BizTimes
3. TheStar.com | Business | Johnson cuts more jobs, idles 10 plants
4. Johnson Controls to cut jobs, close 10 plants | detnews.com | The Detroit News
5. Johnson Controls to close plants | battlecreekenquirer.com | The Enquirer
6. Johnson Controls Throttles Back - Forbes.com
7. Article - WSJ.com
8. UPDATE 3-Johnson Controls to cut more jobs, close 10 plants | Industries | Consumer Products & Retail | Reuters
9. WKOW 27: Madison, WI Breaking News, Weather and Sports -Johnson Controls to close 10 plants, cut jobs
10. Johnson Controls to Close Plants, Cut Jobs | Industrials | Financial Articles & Investing News | TheStreet.com
11. WKZO NEWS: Another Auto Related Casualty
12. JCI announces it will close 10 plants, mostly in automotive - Holland, MI - The Holland Sentinel
13. The Associated Press: Johnson Controls to cut jobs, close 10 plants
14. Johnson Controls to cut jobs, close 10 plants - The York Daily Record
15. The Chronicle | Johnson Controls cutting staff, closing plants
16. RTTNews - Latest Earnings,Upcoming Earnings, Pos Pre Announcements, Pos Pre Announcements , Positive Surprises, Negative Surprises, Hot Stocks, Stock Split Calendar, Stock Buybacks, Dividends, Negative, Positive PreAnnouncements,Surprises .
17. US: JCI closing 10 more plants as profit beckons: Automotive News & Comment
18. Johnson Controls to cut more jobs, close 10 plants
19. AFP: Johnson Controls to close 10 plants to cut costs
20. Johnson Controls to close 10 factories - Dayton Business Journal:
21. JCI to Shut 10 Units; Cut Workforce
22. JCI says several of 10 plants closing are in Europe, but U.S. plants are not yet safe - West Michigan Business News ' MLive.com
23. Update: One report says Johnson Controls cuts will be in Europe, another says Michigan - West Michigan Business News ' MLive.com
24. Johnson Controls To Shut Plants, Cut Jobs - Money News Story - WISN Milwaukee
25. Johnson Controls to close 10 plants - 3/27/2009 11:26:00 AM - Purchasing
26. Article - WSJ.com
27. Johnson Controls restructuring may drive M&A; (Corporate Dealmaker)
28. The Associated Press: Johnson Controls to cut jobs, close 10 plants
29. London Free Press - Business - Johnson plant may be spared stay
30. WLNS TV 6 Lansing Jackson Michigan News and Weather - WLNS.COM | Johnson Controls To Close Plants
31. Holland's Johnson Controls plants look 'very vulnerable,' auto analyst says - West Michigan Business News ' MLive.com
32. Johnson Controls to announce Q2 results on April 21, 2009 - EquityBulls.com
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