Car interior maker Johnson Controls to shut 10 factories, lay off 4,000 employees

28 March 2009

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.