Lingering European economic concerns have led
) to announce the shutting down of its ride performance plant in
Gijon, Spain, and decomplexing of the ride performance plant in
Sint-Truiden, Belgium. The current customer business will be
transferred to other ride performance operations and the Gijon
plant will be closed in the first quarter of 2014.
These Tenneco plants produce shock absorbers for automobile
manufacturers and the replacement market. Around 230 people are
employed in the Gijon plant. However, these actions will lead to
480 job losses in Western Europe. Tenneco will be consulting with
employee works council before taking the final call.
Tenneco expects that this strategy will enable the company to
function proficiently and boost its competitive strength in the
European market in the long run. However, these actions will cost
Tenneco $63 million, of which $55 million will be recorded in the
third quarter of 2013. These charges include non-cash asset
impairments, the cost of relocating tooling, equipment and
production to other facilities, severance and retention payments
to employees, and other related costs.
These actions are part of Tenneco's efforts to reduce cost of
production and cut structural costs in Europe by $60 million
annually. Toward this aim, the company had also completed the
closure of aftermarket facility in Vittaryd, Sweden in Aug 2013.
The company expects the expenses related to the closures to be
recorded in 2013 and 2014, while the benefits will be noticed
from 2016. Thus, the company expects to make a saving of $22
million from this initiative.
Tenneco is a leading manufacturer and supplier of emission
control, ride control systems, and systems for the automotive
original equipment manufacturers (OEMs) and the aftermarket.
Currently, the company retains a Zacks Rank #3 (Hold).
Some stocks that are performing well in the industry where
Tenneco operates include
Magna International Inc.
American Axle & Manufacturing Holdings Inc.
). All these companies carry a Zacks Rank #1 (Strong Buy).
AMER AXLE & MFG (AXL): Free Stock Analysis
GENTEX CORP (GNTX): Free Stock Analysis
MAGNA INTL CL A (MGA): Free Stock Analysis
TENNECO INC (TEN): Free Stock Analysis Report
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