By Rhoda Miel, Plastics News
Glendale, Wisconsin -- Johnson Controls Inc. is laying the groundwork for a global restructuring that will reduce jobs and shut down plants, with about half the changes in its auto interior business.
The company would not provide any specifics during its 3 Sept announcement, but president and chief executive officer Keith Wandell said the restructuring is aimed at staying ahead of the "changing dynamics we see in the various markets that we serve."
That includes a "conservative" JCI estimate for a North American auto production level in 2009 in the "mid-12 million" vehicle range, said Bruce McDonald, executive vice president and chief financial officer, in a conference call with analysts. That's down from 2007 production level of 15.4 million vehicles, and even down from early estimates for 2008 of about 14 million vehicles - a number that has been adjusted down throughout the year as fuel prices rose and consumers stopped buying.
"The climate in that business has changed radically in the last six to nine months," McDonald said. "In automotive … our charges reside in taking the actions that we need to do, to downsize our business to that production level." The company sees "little if any signs" for when business will pick up, so JCI will use the mid-12 million estimate to plan for both 2009 and 2010, and build on that level when conditions improve, he said.
JCI, which is based in Glendale, with its auto interior operations in Plymouth, Michigan, wants to meet with workers and local officials before making any announcements about where and how it will cut positions. It expects to release that information during a 14 Oct meeting with analysts. However, it did note that half of its restructuring will take place within the auto business, with another 30 percent in its building efficiency business and the rest in its power solutions and battery unit.
In July, JCI expanded its auto manufacturing operations in North America when it became the majority owner of 29 former Plastech Engineered Products Inc. plants, now operating under the name JCIM llc.
North America will not be the only region affected, Wandell noted. In Europe, the company needs to reduce excess capacity - especially in Western Europe - and transfer work to lower cost regions in eastern Europe, just as its automotive customers have shifted production to the area. JCI does not expect the same decline in the auto market in Europe it has experienced in North America, McDonald said, but the company does anticipate slowing growth.