TROY, Mich. — ArvinMeritor said it is responding aggressively to the current weakness in global business conditions by executing comprehensive restructuring and cost-reduction initiatives.
In addition, it is exploring strategic alternatives to the spin-off of its Light Vehicle Systems (LVS) business group.
"Swift and decisive actions are necessary in response to today’s global economic conditions, which include softness in all markets in which we participate, as well as weaker foreign currencies," said Chip McClure, chairman, CEO and president of ArvinMeritor.
As part of its cost-reduction plans the company has accelerated restructuring actions, including workforce and discretionary cost reductions, in order to achieve an expected $125 million in annualized savings in 2009.
The company is reducing its global workforce by 1,250 employees, or approximately seven percent, which is comprised of 450 salaried and 800 hourly positions, including full-time, contract and temporary workers.
The new cost reduction actions announced today are additional to those the company executed over the past four years. During this period, the company consolidated and/or closed 17 of its North American and European manufacturing facilities; divested non-core businesses; reduced its global workforce by approximately 4,000; and implemented a business transformation program (Performance Plus).
"We believe the actions we are announcing today, as well as the progress we have made over the last several years to improve our cost structure solidly position our company to address the weakness we are seeing in the market place," said McClure. "I am confident that when the global economies and our industry stabilize we will be a stronger, more focused company."
"We are pleased that in a very tough environment we were successful in achieving our Performance Plus cost savings target of $75 million in 2008," said McClure. "We are also continuing to make strides in executing our profitable growth strategy by expanding our global presence and growing our CVS aftermarket, specialty and military businesses."
The company expects to recognize a non-cash income tax charge of approximately $190 million in its fourth quarter of fiscal year 2008 related to the repositioning of cash for maximum flexibility. The large majority of this non-cash charge is to provide for the utilization of certain deferred tax assets. This charge will result in a net loss for the company on a GAAP basis for fiscal year 2008. Excluding this charge and other previously disclosed special items, the company expects earnings to be in line with the full fiscal year guidance it provided in September. The company expects free cash flow to be near breakeven for the fiscal year, significantly ahead of guidance.