Novi, Michigan – Cooper-Standard Holdings Inc. is to close 10 manufacturing facilities across Europe, Asia and North America in response to a downturn in its global markets, particularly automotive.
The company signalled the closures in a third quarter results statement, showing a 15.4% year-on-year decrease in sales to $790.0 million (€713 million) and earnings (adjusted EBIDTA) 37.5% lower at $43.5 million.
In terms of net income, the company posted a loss of $13.9 million, compared to a gain of $32.2 million a year ago, its third quarter results statement issued 5 Nov also showed.
The net loss included restructuring charges related to job cuts, asset impairment charges in Asia and project costs related to acquisitions and divestitures, Cooper Standard noted.
In response to the declines, chairman and CEO Jeffrey Edwards pointed to Cooper Standard’s “aggressive implementation” of initiatives to cut costs, optimise working capital and “align our operations with lower light vehicle production in all regions."
As well as previously introduced cost-reduction measures, the company is implementing further structural measures, including the closure of 10 facilities – its statement did not identify locations.
In a conference call, however, Edwards said the 10 closures would include the mothballing of five facilities in Asia, with a view to restarting them if the Chinese automotive market recovers. The other units affected are in North America and Europe, though no further details were given.
Costs of $20-25 million have been earmarked for facility closures, including $11 million in restructuring expense already incurred. Payback is expected within two years.
In its results statement, Cooper Standard linked the third-quarter sales decline to the divestment of its AVS business, unfavourable volume and mix, customer price adjustments and foreign exchange factors.
The company also noted issues around unfavourable volume and mix, inflation, price adjustments and higher material costs, only partly offset by operating efficiencies and cost-savings.
Production levels on key vehicle platforms in North America and Asia were “well below expectations,” according to Edwards.
"Unfavourable outcomes of customer negotiations in China and the unanticipated UAW [strike] in the US further reduced sales and profits during the third quarter,” he added.
Looking ahead, Cooper Standard has cut its full-year forecasts for earnings (adjusted EBITDA) to $190-210 million, from a $270-300 million projection issued in August.
Sales are now expected to come in at $3.0-3.1 billion, compared to the previously predicted $3.0 -3.2 billion.