Slammed by high steel prices and turmoil in the auto industry, Dana Holding Corp. said yesterday it will shut as many as 10 plants in the next two years and furlough 2,000 additional workers.
The layoffs, to be completed by Dec. 31, are in addition to 3,000 job cuts announced in August. They were announced as part of the company's report that it lost $271 million in the July-to-September period.
"These are difficult actions," Chairman John Devine said. "But the industry situation forces us to move as quickly as we can in this environment."
The auto-parts producer has 35,000 employees worldwide, including 1,000 in metro Toledo at its world headquarters on Dorr Street, research center in Maumee, and other facilities.
Dana, which exited Chapter 11 bankruptcy Feb. 1, is metro Toledo's largest company, with more than $8 billion in annual sales.
A company spokesman said that the new layoffs "could impact Toledo," although he said the number of cuts - if any - here has not been determined. About 100 local employees were let go in the earlier round of cuts.
"We're moving as quickly as possible to adjust to sharply falling production volumes, turmoil in the financial markets, and volatile commodity prices," spokesman Chuck Hartlage said.
The plant closings will be in 2009 and 2010. All will be in the United States and Canada. The only plant identified yesterday for closure is one in Magog, Quebec, that produces vehicle driveshafts.
Other plants will be selected in consultation with employee unions. Just one of Dana's 54 North American plants is in metro Toledo, off Matzinger Road, which had about 100 employees as of this summer. The plant supplies the Toledo Jeep Assembly complex.
"Our No. 1 focus this year is to make sure we fix the company," the chairman told financial analysts and investors in a midmorning conference call yesterday. "The auto business continues to be weak. We have to get this business profitable and cash flowing."
On a positive note, he said, steel prices have dropped drastically after peaking in the summer.
The firm said yesterday that its third-quarter loss amounted to $2.79 a share, on sales that slipped 9 percent to $1.9 billion. The results were worse than in the year-ago period, when the company lost $69 million, or 46 cents a share, on sales of $2.1 billion.
The firm is considering applying for a loan under a $25 billion package established by Congress to help the auto industry retool to make vehicles with better fuel efficiency, the spokesman said.
Officials revealed yesterday that by Dec. 31 Dana likely will fall out of compliance with financial terms contained in lending agreements. Although such a development could trigger lenders to demand repayment of loans, company officials said they expect to renegotiate terms "in the next few weeks."
The move is likely to lead to higher interest payments, but officials said the firm has adequate funds and access to credit to meet commitments.
Dana shares slipped 19 cents, or 10 percent, to $1.70 each in trading on the New York Stock Exchange yesterday. The shares opened at $12.50 when Dana exited bankruptcy
The earnings announcement came three days after Dana said that Gary Convis, chief executive since April, will resign from that post Jan. 1 to become vice chairman. Mr. Devine will then become chairman and chief executive.
Mr. Convis was traveling and unable to participate in the conference call with analysts yesterday, the chairman said.
The job change, at Mr. Convis' request, will allow him to spend more time working to improve operations, Mr. Devine said.
"Gary is very healthy, motivated, and very critical to this team," the chairman added.
The board of directors last week granted Mr. Convis, an auto industry veteran, a one-time payment of $750,000 for agreeing to extend his contract through 2009. He also will be paid $1 million, a bonus of up to $1 million, and stock options.
Mr. Devine will receive a one-time payment of $1.5 million for agreeing to a similar contract extension.
He will receive a salary of $1.35 million, a bonus of up to $2 million, and stock options.
Dana announced this year that it reached a tentative deal to sell its headquarters and campus on Dorr Street to Health Care REIT Inc., another Toledo company. Dana said it would move to a company-owned research center off Briarfield Road in Maumee.
Since filing for bankruptcy in 2006, the company has sold its art collection and its corporate airplanes.
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