Broad work-force cuts at Dana under study

7/22/2008

Toledo's largest company may be preparing for a broad cut in its workforce, according to a recent letter to employees of Dana Holding Corp. from its chief executive.

In the letter addressed "To the people of Dana," Chief Executive Gary Convis said falling automotive sales in North America "have required Dana and many of our peers to take corresponding actions, including temporary layoffs and some permanent workforce reductions.

"This is, of course, not something that we are eager to do. But if we don't act decisively, we will put our company - and future - at further risk, which would be irresponsible."

Mr. Convis wrote that the "rapid escalation of commodity prices" and the "dramatic and potentially long-term changes in consumer vehicle preferences" are affecting Dana's business prospects. The company, which makes axles and driveshafts used in trucks and sport utility vehicles, is being hurt as consumers turn toward smaller vehicles with better gas mileage.

Although the letter doesn't specify what actions the Fortune 500 company intends to make, spokesman Chuck Hartlage said the automotive-components manufacturer has cut jobs and is studying its whole operation.

He cited as an example nearly 100 employees at its Matzinger Road facility who have been laid off as a result of the two-month shutdown of part of Chrysler LLC's Toledo Jeep Assembly complex.

"Given current business conditions, we are continually reviewing our operations to identify ways to improve efficiency and reduce costs," Mr. Hartlage said. "We have recently announced a number of temporary and indefinite layoffs at isolated plant locations, in response to adjustments in the customers' product mix and build rates. We will continue to review our requirements and act accordingly."

Dana, which had $9.2 billion in revenue last year, will announce its quarterly earnings Aug. 7 in a conference call with analysts. The results will be for the company's first full quarter since it emerged from bankruptcy protection at the end of January.

It reported a $24 million loss on sales of $1.56 billion in February and March, after it had emerged from bankruptcy.

In addition to its employees on Matzinger Road, Dana employs about 175 people at its Dorr Street headquarters, 465 at its ASG Tech Center in Maumee,

155 at its facility on Trust Drive in Holland, and 220 at its facility on Longbow Drive in Maumee's Arrowhead Industrial Park.

Mr. Hartlage would not say whether any other area facilities would suffer staffing cuts in the weeks ahead, and Mr. Convis' letter did not specify what adjustments would be made.

Aaron Bragman, an automotive industry analyst with Global Insight in suburban Detroit, said any cost-cutting moves by Dana would be understandable, given the current state of the North American automotive market.

"Cutting employees is always a last-ditch [choice], and they probably waited until they were certain where the market was headed," he said.

"They're still heavily invested in Detroit Three truck platforms.

"Everybody's in the same boat because of the rising cost of steel, but in terms of what you're selling, that's where they're probably more at risk than most."

Mr. Convis noted in his letter to employees that the Toledo firm is a player in other automobile markets faring better right now than North America's.

He also noted that Dana's off-highway heavy-equipment business has continued to grow at an annual rate of about 20 percent, and that efforts launched during the bankruptcy to increase profitability are progressing.

Contact Larry P. Vellequette at:

lvellequette@theblade.com

or 419-724-6091.