slashed 2006 earnings guidance and set a plan to cut 850 North American jobs to reflect reduced output in Detroit.
Citing a greater-than-expected impact from higher commodity prices, the Auburn Hills, Mich., auto parts company cut its full-year profit forecast to $3.95 to $4.10 a share, excluding a 15-cent restructuring charge.
BorgWarner had earlier expected to make $4.35 to $4.60 a share.
"We continue to adjust our North American operations to the realities of the region's drastic volume declines and customer restructurings, despite the fact that our growth in other parts of the world remains strong," said Tim Manganello, chairman and CEO. "All of our North American operations are affected by the significant recent actions at Ford, DaimlerChrysler, General Motors and other customers. This is more than a 'one customer, one product' issue. We are resizing our North American operations in response to current market conditions, and will continue to proactively manage our North American business as we build infrastructure in those regions of the world where we are growing."
The full-year 2006 impact on the company from commodity price increases is estimated at $40 million, up from the previous estimate of $25 million, primarily due to recent increases in the cost of nickel used in turbochargers.
Nickel prices have almost doubled from $6.50 a pound in the first quarter of 2006 to an expected $12 a pound projected for the second half of the year.
BorgWarner uses about 6.5 million pounds of nickel a year in its turbochargers.
Manganello said that despite weak industry conditions in North America, the company still expects to grow companywide 2006 sales at the low end of its original guidance of 5% to 7% and be back on track for 7% to 9% growth in 2007.
The job cuts will take place at its 19 plants in the U.S., Canada and Mexico and reduce the workforce by 13%.
The news comes just a day after rival
reduced income guidance.