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Dana to cut 5,800 additional jobs: Firm cites $256 million loss in 4th quarter, depressed demand(Blade, The (Toledo, OH) Via Acquire Media NewsEdge) Mar. 17--Toledo auto supplier Dana Holding Corp. reported widening losses for the final quarter of 2008 Monday and announced that it has begun to slash an additional 5,800 people from its global payroll. The company -- which hasn't reported a profit since emerging from bankruptcy protection on Jan. 31, 2008 -- said it lost $691 million in the 12 months since it emerged from bankruptcy. But for calendar 2008, it logged a profit of $18 million after booking a $709 million gain from its bankruptcy emergence. The city's largest corporation said it lost $256 million, or $2.64 a share, in the fourth quarter of 2008, compared with a $257 million loss, or $1.52 a share, for the same period a year ago. "At the end of the day, I felt very good about what we achieved in [2008]," John Devine, chairman and chief executive officer, told analysts on a conference call. The company's "right-sizing" efforts to reduce its head count to adequately meet current depressed demand "will be largely done by the end of this month," he said. Company spokesman Chuck Hartlage said Dana, after the newest job cuts, will have about 23,000 employees by the end of this year, down from 34,000 at the end of 2007. He said he could not say how many of Dana's 1,000 local em-ployees might lose their jobs, but noted that the bulk of job cuts are to be from manufacturing operations. The firm's earnings announcement had been delayed by almost three weeks. It blamed rapidly changing economic conditions. Sales for the fourth quarter were $1.5 billion, down $636 million, or 29 percent, from the prior year, the company said. Sales for all of 2008 were $8.1 billion, down $626 million from $8.7 billion in 2007. The company said nearly all of its loss in sales occurred in the fourth quarter with the collapse in the worldwide automotive industry and the global credit crisis. Before it emerged from bankruptcy, Dana estimated its revenues in 2008 would be $8.6 million to $8.8 million -- down significantly from the $13.2 billion in sales -- with 85,000 employees -- in 1999. The same forecast predicted a profit of $81 million last year. The downsizing axle and thermal products manufacturer, which plans to move from its Toledo headquarters to a facility it owns in Maumee this year, said it had $777 million in cash remaining and total liquidity of $866 million. Its total debt was $1.25 billion. Jim Yost, Dana's executive vice president and chief financial officer, said the fourth-quarter collapse of global demand for its products in the automotive industry meant the company "was not able to achieve the cost savings that we were able to achieve in the first nine months of 2008." Ford Motor Co. remains Dana's largest single customer, representing some 17 percent of its overall sales revenue. General Motors Corp. is second, representing 6 percent, and Toyota Motor Corp. is third at 5 percent. However, 42 percent of Dana's revenues for 2008 came from "nonautomotive" industries. The stock market reacted positively to Dana's announcement. Its shares moved 10 cents higher yesterday to 41 cents on the New York Stock Exchange on volume of 1.1 million shares, nearly triple the company's daily average. Even with the gain, however, Dana's stock is down 97 percent from its $12.70 close on Feb. 1, 2008, its first day of trading. Even though Dana's financial position continues to deteriorate, its recent emergence from bankruptcy seems to have allowed it to fare better than some of its competitors. American Axle & Manufacturing Holdings, Dana's main competitor in its light-duty-truck segment, received an auditor's warning of "significant unfavorable consequences" last week. American Axle supplies mainly GM and Chrysler LLC, both of which are surviving on government loans. Ford has thus far been able to avoid seeking government assistance. "If the market doesn't come back, everybody's in a terrible spot," said David Cole, director of the Center for Automotive Research in Ann Arbor. "We'll see how this all unfolds, but I think [Dana is] heading in a very positive direction right now. There are some tough competitors out there, but those competitors are being whittled down pretty quickly." Analysts had few questions for Dana executives, but did ask about the company's continuing ability to improve its products while simultaneously reducing its research and development budget. Mr. Devine told investors that Dana "recognize[s] that we have to change our product portfolio," in response to government mandates to improve fuel economy in North America. He said that although the company has reduced its capital expenditures -- to $150 million -- in response to the global slowdown, the company "is working on a number of products that we think will have a significant impact" on the company's future profitability. Contact Larry P. Vellequette at: [email protected] or 419-724-6091. To see more of The Blade, or to subscribe to the newspaper, go to http://www.toledoblade.com. Copyright (c) 2009, The Blade, Toledo, Ohio Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |