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Slowdown will prompt Johnson Controls to close plants, cut jobs
Published September 3, 2008 - BizTimes Daily
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Johnson Controls Inc., the largest publicly held company in Wisconsin, announced today that it will close plants and eliminate jobs as it reacts to economic slowdowns in the automotive and construction sectors.
The Glendale-based company said it plans to initiate restructuring activities which will result in an estimated pre-tax charge of $450 million to $500 million in its 2008 fourth quarter.
The company said the restructuring charge relates to cost reduction initiatives in its automotive experience, building efficiency and power solutions businesses and includes workforce reductions and plant consolidations. The company expects to substantially complete the initiatives by early 2010.
In a conference call with reporters and analysts this morning, Keith Wandell, president and chief operating officer of Johnson Controls, said the company will not disclose where the plant closings and job eliminations will take place until after the employees have been notified.
A company spokeswoman said Johnson Controls has about 2,500 employees in Wisconsin, but she said she could not comment about the impact the restructuring will have in the state.
The company said automotive-related restructuring is in response to the fundamentals of the European and North American automotive markets. The actions target reductions in the company's cost base by decreasing excess manufacturing capacity due to lower industry production and the continued movement of vehicle production to low-cost countries, especially in Europe.
Johnson Controls said it expects the restructuring plan will improve its long-term growth prospects in its highly competitive global markets.
"The (vehicle) production volumes in North America are down … And even though we do see continued vehicle build growth around the world, there will be a redistribution of that production, and we're just merely realigning our resources to best take advantage of that and really to improve our cost position in the industry downturn, if you will, in North America," Wandell said.
The company is projecting a 20-percent reduction in its outlook for 2009 automotive production than was projected a year ago.
