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Johnson Controls Inc, a maker of car interiors and batteries, said it would shut 10 factories and cut about 4,000 jobs. Company management didn't disclose the locations of the plants that will be closed or the extent of the job cuts but did reveal that the restructuring activities will result in an estimated pre-tax charge of $200 million to $215 million in the fiscal second quarter. The majority of the restructuring involves Johnson Control's Michigan-based automotive business and targets excess manufacturing capacity resulting from lower industry production in the European, North American and Japanese automotive markets, according to the company. Most of the affected plants will be in Europe, where the Milwaukee, Michigan-based supplier pared its forecast for 2009 auto output by 12 per cent to 14.3 million vehicles. North American output will shrink 5.4 per cent to 8.8 million units. The retrenchment expands on a $495 million restructuring program announced last year, which Johnson Controls said was two-thirds complete. Automotive and battery operations provided 63 per cent of the company's 2008 revenue, with the balance coming from its climate-control business for buildings. The company also is implementing restructuring initiatives in the company's Power Solutions business, which supplies automotive batteries. The plan focuses on optimizing manufacturing capacity. The actions reflect lower overall demand for original equipment batteries resulting from lower vehicle production levels. Spokesman Glen Ponczak wouldn't specify how many jobs were being shed beyond saying the reductions would be proportional with the last pullback, which eliminated 9,400 jobs. Based on the cost of the moves, about 4,000 positions would be affected from a global payroll of 140,000. The second-quarter impact of the restructuring is expected to be partially offset by an approximately $75 million non-recurring tax benefit. The company had announced previously that it expected tax benefits in the second through fourth quarters of fiscal 2009 to total $150 to $200 million. ''While we don't expect near-term recoveries in our markets, we believe we can manage through this environment from a position of strength and enhance our ability to gain further market share while improving our margins,'' said Stephen Roell, Johnson Controls chairman and CEO. ''Today's announcement demonstrates our continued ability to improve our cost structure. Earlier this month, we completed a debt offering that significantly improves our liquidity and gives us the flexibility to take advantage of opportunities that may arise as a result of the economic environment.'' The company is now in its fiscal second quarter, which ends 31 March. The company reaffirmed its forecast for a return to profit in the second half of this fiscal year, and said the latest restructuring should be finished in 2010, with a payback coming in 18 months. Automotive operations will account for 80 per cent of the restructuring expenses, the company said. Johnson Controls posted a $608 million loss in the quarter that ended in December, its first since 1992, and said in January that it would have a loss in the current quarter, too. That deficit had been projected at 15 cents a share by analysts. The cutbacks announced last year should be ''substantially completed'' in fiscal 2009, resulting in earnings benefits of 20 cents to 25 cents a share in 2010, it said.
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