set plans to lay off more than 500 workers and divest itself of businesses employing nearly 10,000 more in a bid to slash its cost structure.
The Toledo, Ohio, auto parts company said it would focus on light- and heavy-vehicle drivetrain products, associated structures, sealing and thermal products. As a result it will divest itself of three noncore businesses with annual revenue of $1.3 billion.
Dana also said it would restructure its Automotive Systems and Heavy Vehicle Technologies and Systems groups and cut benefit costs.
"These actions will position Dana to be more profitable moving forward," said CEO Michael J. Burns. "These are unprecedented times for Dana and the automotive industry. While a number of the actions we are taking are painful, they are vital to refocusing our company, accelerating cost and process efficiencies, and driving improved performance across our global organization.
Dana intends to divest itself of the engine hard parts, fluid products, and pump products business, which together employ 9,800 people worldwide. The engine hard parts business consists of 26 operations making piston rings, camshafts and engine bearings. The fluid products business consists of 16 operations making fluid products for braking, power steering, HVAC and fuel applications. The pump products business consists primarily of an original equipment fluid transfer pump operation in Diadema, Brazil, and an aftermarket pumps operation in Santa Marina, Brazil.
Dana expects to take some $315 million in pretax charges to reduce the net assets of these businesses to realizable value, leading to a substantial 2005 loss.
"While no longer central to Dana's future direction, these operations and the people associated with them have great potential for owners that are more strategically focused on these market segments," Burns said. "We expect to use the proceeds from these divestitures to reduce debt and reinvest in those businesses that will be key to profitable growth in the future."
Dana will close its Buena Vista, Va., axle plant, which employs 275 people, and its Bristol, Va., driveshaft factory, which employs 270 people. It will move the assembly and component lines that support the steering shaft business in the Lima, Ohio, driveshaft facility to Mexico, affecting 100 of the 385 people at Lima.
Dana also set a 5% salaried workforce reduction, in addition to the operations to be divested or closed, through 2006. The reduction will be accomplished primarily through attrition, Dana said. The company will also eliminate the Employees' Stock Purchase Plan, reduce the company's share of the costs of its U.S. medical benefit plans, suspend matching contributions to its U.S. and Canadian long-term savings programs, and take additional actions to reduce benefit costs.
On Thursday, Dana rose 11 cents to $7.67.