Declining automotive and truck sales in North America are forcing component supplier BorgWarner to reduce its workforce by 850 people (13%) across its 19 operations in the U.S., Canada and Mexico.
According to Tim Manganello, chairman & CEO of the Auburn Hills, MI-based company, “We continue to adjust our North American operations to the realities of the region's drastic volume declines and customer restructurings, despite the fact that our growth in other parts of the world remains strong.”
“All of our North American operations are affected by the recent actions at Ford, DaimlerChrysler, General Motors and others vehicle manufacturers. This is more than a ‘one customer, one product’ issue,” Manganello said. “The North American auto industry is undergoing fundamental change, so we are resizing our North American operations in response to current market conditions.”
The workforce cuts should be completed by the end of October.
BorgWarner is lowering its 2006 earnings guidance for investors, in part because of vehicle production declines, but also because of higher commodity prices.
BorgWarner expects to pay $40 million for raw materials this year, up from previous projections of $25 million, mostly due to the higher cost of nickel that’s used in turbochargers. Nickel prices have shot up from $6.50 per pound in the first quarter this year to over $12 a pound. The company uses about 6.5-million pounds of nickel a year in its turbochargers.
