TOLEDO, Ohio (Nov. 10) — Auto parts supplier Dana Corp. unveiled a broad five-point plan to restructure its operations and reduce its size as it reorganizes under Chapter 11 bankruptcy protection.
Among the measures, Dana said it will close eight plants in North America — these being in addition to the eight it already plans to close. The company has not decided which plant to close or how many jobs will be cut. The closings would save an estimated $60 million to $85 million a year.
Dana also said it would seek to renegotiate contracts with customers and recover more reimbursements for higher raw material costs. It expects to save $175 million to $225 million from these actions.
Dana CEO Mike Burns told of the restructuring plans Nov. 9 in a letter to employees and in the 101-year-old supplier's quarterly filing with the U.S. Securities and Exchange Commission.
"There is an urgency to move these things forward in a way that executes well and quickly," Burns said. "And we must come out viable in the long term in terms of a competitive cost structure."
In the filing, the company said its business has been bludgeoned by lower Big Three production this year in North America, particularly of light trucks. As a result, Dana is seeking cuts deeper than first expected when it filed for bankruptcy on March 3.
In total, Dana said it expects to save between $405 million and $540 million a year from Burns' five-point plan. The biggest chunk of that would come from changes in customer contracts. And Dana said it would consider rejecting unprofitable contracts in bankruptcy court. Burns said that would be a "last resort."