Quality Magazine

Dana Closing 8 Plants

January 1, 2007

TOLEDO, OH-Auto parts maker Dana Corp. said it plans to close eight U.S. plants and downsize three others in North America. Dana, which filed for bankruptcy protection in March 2006, also said in a filing with the U.S. Securities and Exchange Commission it would eliminate health benefits for retirees and attempt to alter labor contracts at its unionized plants.

Dana, which sells brakes, axles and other parts to most major automakers, said in its bankruptcy filing that rising energy costs were driving up production costs and hurting demand for its customers’ products.
Closing the plants, eliminating health benefits and reducing other labor costs should save between $405 million and $540 million each year. The company also plans to renegotiate contracts with its customers and cut administrative costs.

The company already has started to shift operations at two of its plants and close four U.S. sealing and thermal plants and one in Canada. “We expect to continue to move manufacturing capacity from the U.S. to lower-cost countries, such as Mexico,” the company’s filing said. A large slice of its business comes from three customers: Ford Motor Co., General Motors Corp. and DaimlerChrysler AG.

Parts makers over the last two years have been squeezed by automakers forcing the suppliers to sell them parts at lower prices. The nation’s largest parts maker, Delphi Corp., filed for bankruptcy protection in 2005.
Dana said it lost $356 million for the quarter ended Sept. 30 compared with $1.2 billion a year ago when the company recorded tax and restructuring charges. Sales fell slightly to $2 billion from $2.1 billion. For the year to date, the company has lost $510 million, down from a loss of $1.2 billion a year ago. Sales fell to $6.5 billion from $6.6 billion.