US firm Tenneco Inc. is intending to close its ride performance plant in Gijon, Spain and decomplex its ride performance plant in Sint-Truiden, Belgium as the company continues to address the ongoing weak macroeconomic conditions in Europe. Both plants manufacture shock absorbers for vehicle manufacturers and the replacement market.
These measures are still subject to consultation with employee works councils; these could also lead to streamlining of approximately 480 jobs in Western Europe while allowing the most efficient use of the company’s capital assets and production capacity across the region.
“We sincerely regret the impact these actions would have on our employees at Gijon and Sint-Truiden,” said Hari Nair, CEO, Tenneco. “However, the industry outlook for Europe continues to be weak with no near-term recovery. These changes, although difficult, would help us operate as efficiently as possible in this environment and strengthen our long-term competitiveness in the critically important European market.”
The Illinois-headquartered manufacturer of clean air and ride performance products and systems for automotive and commercial OE vehicles currently employs 230 people at the Gijon plant. The company intends to begin transferring current customer business to other ride performance operations and intends to complete the closure in the first quarter of 2014.
The actions in Sint-Truiden would transfer higher labour assemblies to other ride performance operations while focusing the Sint-Truiden plant on more highly automated, advanced component production and final assembly.
Tenneco expects to record charges of US$63 million related to these actions, of which US$55 million will be recorded in the third quarter. These charges include non-cash asset impairments, the cost of relocating tooling, equipment and production to other facilities, severance and retention payments to employees and other costs related to these actions.
This announcement follows the company’s closing of an aftermarket facility in Vittaryd, Sweden, which was completed in August, 2013.
These actions, including the Vittaryd closure, are part of Tenneco’s previously announced cost reduction initiative that is intended to reduce structural costs in Europe by US$60 million annually with related costs of approximately US$120 million. Tenneco expects that most of the expense will be recorded in 2013 and 2014, and that the company will reach a full savings run rate in 2016. The actions related to this announcement would be expected to represent $22 million of the projected savings.