Dana to shutter 8 plants, revamp labor deals

TOLEDO, Ohio — Beleaguered automotive and truck parts supplier Dana says it will close as many as eight production plants and scale back three more in the U.S. and Canada.

The company, which filed for bankruptcy protection from creditors earlier this year, has been looking for ways to slash costs as part of its ongoing restructuring effort.

In a filing with the U.S. Securities and Exchange Commission, Dana said it plans to move manufacturing capacity to lower cost countries, such as Mexico.

It also announced it would eliminate health benefits for retirees and try to restructure labor contracts at its unionized plants.

“Our existing labor costs, especially in the U.S., impair our financial position and are a significant impediment to a successful reorganization,” the company said in the filing.

Closing plants and slashing benefits could
save Dana up to and $540 million

The company did not name at this time which plants would close, but Dana Chief Executive Michael Burns said in a letter sent to employees an announcement would likely come next month.

There are over a dozen Dana plants or warehouses in Canada — mostly in Ontario — including a sealing facility in Burlington, Ont., which is already slated to close. A handful of other locations have seen layoffs in the last few months.

Closing the plants and reducing labor costs should save between $405 million and $540 million each year, Burns said.

“These changes are neither easy nor pleasant,” Burns stated in the letter. “The reality is that we simply cannot continue to provide a solid base of jobs in our communities and a strong presence in our industry with incremental, patchwork solutions.”

Several large first tier auto suppliers, including Delphi Corp., have suffered as a result of Big Three carmakers losing market share in recent years. Ford and GM has closed several plants and slashed thousands of jobs on both sides of the border, severely affecting their suppliers and trucking companies that serve them

About three quarters of Dana’s sales are from automotive systems and component sales, while the rest from truck products.

Dana says for the year to date, it has lost $510 million, down from a loss of $1.2 billion a year ago. Sales fell to $6.5 billion from $6.6 billion.
Officials at one of Dana’s rival companies told TodaysTrucking.com earlier this year that some truckmakers, nervous about filling order boards, have enquired about spare capacity.

— with files from Associate Press