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.
A Cooper Standard spokeswoman confirmed that six of the impacted facilities are in Asia, five in China. Edwards said the five sites in China will be mothballed to keep the firm in position to capitalise on if the Chinese auto industry rebounds as projections anticipate.
The firm did not elaborate as to whether the other Asia-based facility would be closed or mothballed.
The remaining sites—three in North America and one in Europe—will be closed.
A spokeswoman confirmed that some of the facilities have already closed, but firm did not disclose specific locations of the 10 sites. When the shutdowns are complete its manufacturing network will consist of 93 sites.
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.