LAKE FOREST, Ill. – Tenneco Inc. has announced its intention to close its ride performance plant in Gijon, Spain, and "decomplex" its ride performance plant in Sint-Truiden, Belgium, as the company continues to take actions to address ongoing weak macroeconomic conditions in Europe. Both plants manufacture shock absorbers for vehicle manufacturers and the replacement market.
The actions announced today are subject to consultation with employee works councils and in total would eliminate approximately 480 jobs in Western Europe, while allowing the most efficient use of the company’s capital assets and production capacity across the region, the company stated.
"We sincerely regret the impact these actions would have on our employees at Gijon and Sint-Truiden," said Hari Nair, chief operating officer, 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."
Tenneco 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 labor assemblies to other ride performance operations, while focusing the Sint-Truiden plant on more highly automated, advanced component production and final assembly.
Tenneco says it expects to record charges of $63 million related to these actions, of which $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. 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 $60 million annually with related costs of approximately $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.
