STOCKHOLM, Sweden (Nov. 28) — Trelleborg A.B. has begun a strategic review of its automotive business that could lead to plant closures or divestitures affecting up to 700 employees and result in nearly $130 million in costs.
The first action will be the closing of the company's anti-vibration systems plant in Trowbridge, England, which will affect 150 workers and result in nearly $40 million in closing costs. Production at that plant will be transferred, likely by as early as mid-2007, to other Trelleborg Automotive plants in Romania and Burgos, Spain, the company said.
Trelleborg announced the proposed changes at a "Capital Markets Day" with the financial community in Stockholm.
"Strategically, we are proceeding with a thorough analysis of our positions and the strategic measures connected with these," said CEO Peter Nilsson. "Regardless of our choice of approach, we must continue to implement operational measures to improve profitability."
Trelleborg also identified a Fluid & Acoustics unit plant in Mannheim, Germany, for possible personnel reductions. Again, production would be move to Trelleborg plants in eastern Europe, where the company has units in the Czech Republic, Poland and Romania.
"A number of actions have been identified, these are being analyzed and will successively be initiated and announced," Nilsson said, without being more specific.
The company said it is looking at all the options but its first priority is to preserve the value of the assets under scrutiny. Trelleborg is now in the final stages of a review of its automotive activity and it intends to make significant announcements by the first quarter of 2007.
About two months ago, Trelleborg noted that George Caplea, Automotive Business Unit president, would be leaving the company. Since that time, Nilsson has been in charge of day-to-day management of the automotive unit.
Nilsson noted that the automotive sector has been underperforming, in part because it has been extremely difficult to pass on raw materials costs to the customers. In other sectors, the customers have been more willing to accept price increases based on higher raw material costs.