SKF sees sales, profits rise, as US seal plant is set to close
Gothenburg, Sweden-Swedish engineering group SKF, which numbers seal maker Chicago Rawhide among its units, has reported an 11.4 percent rise in sales for the second quarter 2005 to SKr 12 750 million (Euro 1356 million). Profit before taxes for the quarter increased by 26 percent, to SKr 1320 million.
Profit for the first half of 2005 was SKr 2443 million, on turnover of SKr 24 610 million.
The second quarter's profits were affected by one-time items, including, said SKF, a charge of SKr 190 million for the closure of two factories in the US making automotive parts. This consolidation is designed to help SKF reduce costs and remain competitive, said a statement from the group on the closure plans.
One of the units affected is the Chicago Rawhide seals plant in Springfield South Dakota, which SKF announced 29 June it is going to close, along with a bearing plant in Aiken, South Carolina, in a phased process taking 18 months.
SKF intends moving seal production from Springfield to seals units in Elgin, Illinois, and Guadalajara, Mexico with the loss of over 200 jobs in Springfield. Bearing production will be transferred to SKF's bearing plant in Puebla, Mexico, with the loss of over about 250 jobs.
SKF attributed the need for these cuts to restructuring in the US automotive industry and the weaker marketplace,â€ which, it said, have led to strong pressure on the profitability for many companies supplying this industry.
Our OE automotive business in the US is under very tough pressure and we need to take these measures to restore our profitability in the US,â€ said Tryggve Sthen, president SKF Automotive Division, in a company statement.
SKF two major product areas are seals and rolling bearings. Its seals include elastomer-based radial shaft seals as well as mechanical seals, V-ring seals and sealing and spacing washers.