Visteon Corp, the Michigan-based supplier of auto parts, has been hit hard as auto manufacturers continue to slash production targets.
With fourth-quarter product sales projected to drop by as much as 43 per cent from a year ago, Visteon is preparing to shed some flab – which includes the axe for some 800 employees worldwide. It will also suspend its 401(k) matching contributions and salary increases.
For January, Visteon will adopt a four-day workweek for about 2,000 of its employees, along with a commensurate 20 per cent reduction in salaries.
The company has said it is on track to complete its 800 global job cuts, which were first announced in October, by the end of the first quarter, with annual savings of $60 million expected upon completion.
However, this did not help its credit rating – Standard & Poor's has downgraded Visteon two notches, from B- to CCC – both 'junk' ratings - saying weak auto sales will continue to weigh the company down.
The company claims that it continues to win new business with a broad spectrum of customers across all regions, a reflection of the company's significant global footprint and breadth of innovative products. New business wins in 2008 were about $650million.
Visteon has been scaling back its operations for some time now. The company has already cut 2800 jobs in recent months. S&P said Visteon's liquidity could decline enough in 2009 to force the company to consider financial restructuring.
Visteon expects product sales for the just finished quarter to be around $1.55 billion, compared to $2.7 billion the same period last year. The company has been in a three-year restructuring after a bailout by former parent Ford Motor Co in 2005.
In cutting jobs and retirement benefits, it follows the example of other major corporations like FedEx Corp, Starbucks Corp and Motorola Inc.