Johnson Controls to Close 16 Plants

The Milwaukee Journal Sentinel

MILWAUKEE, WI — Johnson Controls Inc. announced details of a worldwide restructuring that will eliminate 5,000 jobs and close 16 factories.

The Glendale, WI-based company outlined the cost-cutting plans in a filing to the U.S. Securities and Exchange Commission. On June 30, Johnson Controls announced without elaboration that it absorbed a $197 million restructuring charge to cover upcoming costs of severance payments and plant closings.

The restructuring will take place over the next 12 months, said company spokesman Glen Ponczak.

The job cuts equal 3.7 percent of the group’s 136,000 global workforce. The engineering firm, which ranks No. 71 on the 2006 Fortune 500 list of America’s biggest corporations, is also the largest publicly traded company in Wisconsin based on sales.

The company’s auto-supplier division, which has come under financial strain from a downturn in the broader auto industry, accounted for 3,900 of the 5,000 job reductions.

That business has slumped, particularly in North America, as automakers struggle with surging gasoline prices, rising interest rates, a cooling economy and American consumers who are saddled with record levels of debt. Sport utility vehicles in particular, for which Johnson Controls supplies seats and interior components, have felt the brunt of the slowdown.

Among the automotive cuts, 2,200 jobs stem from the North American auto supply operations, with an additional 1,450 in Europe and 250 in Asia. That division manufactures interiors, including seats, door panels and dashboards.

Similarly, 14 of the 16 plant shutdowns come from the auto sector – 10 of them from North America, three in Europe and one in Asia. In Europe, Johnson Controls is closing supplier plants in Western European nations and moving them to Eastern Europe, aligning its just-in-time supplier operations to big automakers that have shifted production to low-cost Eastern European economies.

The corporation’s building controls division – which outfits commercial and residential buildings with heating, air-conditioning and security systems and then maintains them – will cut 200 jobs in North America, 600 in Europe and 280 in other parts of the world. It will close two plants in the buildings controls division, both outside the U.S.

The downsizing also follows the December acquisition of York International Inc., a maker of heating and air-conditioning equipment based in York, PA, which significantly expanded the size of the corporation.

The battery division, the third leg of the corporation, will lose 20 positions worldwide. The company’s stock on Wednesday closed up 14 cents at $74.68.