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2006-11-27 News Release

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Trelleborg Automotive initiates action program

The first phase of the action program by Trelleborg for the Automotive business unit might affect about 700 employees in Europe.

The strategic and operational review announced by Trelleborg for the Automotive business area has resulted in an action program, of which the first step was announced during Trelleborg’s Capital Markets Day in Stockholm.

The costs of the total action program are estimated to amount to approximately SEK 875 M before tax and SEK 700 M after tax, of which about SEK 400 M before tax and SEK 225 M after tax will affect cash flow in 2007 and 2008. The measures are expected to have a payback time affecting cash flow of less than three years after implementation. The positive earnings effect is estimated at about SEK 175 M before tax and SEK 115 M after tax at full impact.

Find Information and Suppliers of automotive antivibration systems.

Trelleborg Automotive is a world leader in the development and manufacture of polymer-based components and systems used for noise and vibration damping for passenger cars, light and heavy trucks, rail, marine and industrial applications.

Trelleborg Automotive Antivibration Systems. Click Go for High resolution image. photo: Trelleborg

“Our starting point for this work comprises our long-term strategic positioning and continuous operational efficiency measures,” said President and CEO Peter Nilsson in his presentation. “A number of actions have been identified, these are being analyzed and will be successively initiated and announced.

“Already now, we are taking the first step within the framework of this action program. These initial measures pertain to three plants and, in addition, include a number of human resources and rationalization measures in Europe. In total, the measures might affect about 700 employees. The measures will generate a positive effect on profitability and margin and have a short payback time after implementation.”

The first step, which is a part of the total action program, involves:

• A proposal to close a plant within the AVS business unit in Trowbridge, in the UK, with sales of approximately SEK 225 M and about 150 employees. If the proposal is implemented the production will be relocated to existing units, primarily to Trelleborg’s newly constructed unit in Romania, and to Burgos, in Spain. Production is expected to continue until mid-2007. The costs of the proposal is expected to amount to about SEK 150 M, of which about SEK 20 M will affect cash flow subject to sale of property and the cost would be charged in the fourth quarter of 2006.
• Further personnel reductions will also be made in Western Europe, possibly affecting a total of about 200-250 employees. These reductions could be made, for example, in Fluid & Acoustic in Mannheim, Germany. The transfer of resources from Western Europe to Eastern Europe is part of the program. This involves existing units in the Czech Republic, Poland and Romania, which will be conducted before the program can be fully implemented. These investments will strengthen the Group’s long-term competitiveness in Europe and generate opportunities for further consolidation.

If the proposal is implemented the costs for Trowbridge and personnel reductions are estimated to total about SEK 275 M, of which approximately SEK 150 M will affect cash flow, primarily in 2007. The costs will mainly be charged in the fourth quarter of 2006 and the first half of 2007. The positive earnings effect is expected to amount to about SEK 90 M when full impact is achieved in 2009, but it is anticipated that most of the improvements will occur in 2008.

• Divestment or, as a second alternative, extensive restructuring or closure of two small plants in Europe. The various alternatives are under final analysis.

“We are continuing our review of Automotive,” said Peter Nilsson. “Strategically, we are proceeding with a thorough analysis of our positions and the strategic measures connected with these. Regardless of our choice of approach, we must continue to implement operational measures to improve profitability.”

Negotiations have commenced with trade union representatives at the units affected.

Trelleborg Automotive comprises two business segments:

• Antivibration Systems: Noise and vibration-damping solutions to all vehicle segments and industrial markets, pneumatic suspension systems and thermoplastic boots for driveshafts manufacturers.
• Fluid & Acoustic Solutions: Engine-cooling, air-supply and acoustic-management systems for cars and trucks. The unit, which offers highly specalized materials expertise, also supplying brake shims, vibration damping materials and gas struts.

The head office is located in South Haven, Michigan, in the US.
Production units are located in Brazil, China, the Czech Republic, France, Germany, India, Italy, Mexico, Poland, Slovakia, South Korea, Spain, Sweden, Turkey, the UK and the US.

Find information about Trelleborg.

Read a recent press release about - Trelleborg Wheel Systems Hartville, Ohio, that manufactures rubber tires for material handling vehicles such as forklifts, will consolidate production in Sri Lanka.

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