Divestment May Be Tough for Dana Corp.

From The Blade

TOLEDO, OH — With operations from Visteon Corp. and other troubled automotive suppliers already up for sale, Toledo’s Dana Corp. may have a tough time divesting $1.3 billion worth of businesses that it put up for sale.

But the fact that some of the 44 facilities to be sold were recently organized by the United Auto Workers, as were two other Virginia factories to be closed, was not likely a factor in the decisions about their fates, they said.

As part of a sweeping plan to cut costs, Dana plans to sell three businesses that make piston rings, camshafts, engine bearings, pumps and fluid products for braking and other uses.

Collectively, the businesses have 9,800 employees worldwide, including 560 at the three northwest Ohio factories.

Though the Dana businesses are profitable and there are some private equity firms interested in auto parts companies, there are numerous opportunities for buyers, said David Siino, an analyst with Gabelli & Co. Inc. of Rye, NY.

The firm provides research to one of Dana’s largest institutional investors, headed by the famed Mario Gabelli.

“The problem is, it’s not a seller’s market right now,” Siino said. “I don’t think they’ll get a big price for any of the businesses.”

Other parts suppliers could buy the businesses, depending on what kind of technology, capabilities, and capacity they have to offer, and European and Asian parts makers looking for an entree into North America may be interested, said David Cole, chairman of the Center for Automotive Research in Ann Arbor.

Dana’s stock price suffered yesterday after news of its restructuring, which was announced Thursday, had a chance to sink in. The stock closed down 37 cents at $7.39 a share on the New York Stock Exchange.

As part of its restructuring plan, the Fortune 500 firm will trim 5 percent of its worldwide salaried work force, largely through attrition; make employees pay more for health care; end a company match in a 401(k) retirement plan; freeze wages; and cut 100 of 385 jobs at an already diminished factory in Lima, Ohio.

Work from the Lima driveshaft plant, which little more than four years ago had 650 employees, has already been moved to Canada, India and Asia, said Brian McClurg, president of UAW Local 1765 at the plant.

He was disappointed the company didn’t first try to get government incentives before deciding to make another move, this time to a company factory in Mexico. After reaching a neutrality agreement with the UAW just two years ago in hopes of getting more work from the Big Three, Dana is unlikely to have reversed its position already, said Siino.

Dana has said union status had no bearing on plant closures.

_______________________________________

Click