Superior Industries to Close Factory, Cut 29% of US Workforce
Aluminium wheel manufacturer Superior Industries International has announced the closure of its factory in Pittsburg, Kansas. This decision was taken during its recent review of strategic initiatives to reduce costs and balance its manufacturing capacity in light of reduced demand for SUVs and light trucks.
The closure will take place on December 19 and 600 jobs will be lost as a result. Superior Industries expects to incur severance and related costs of approximately US$1.8 million in the next six months from August 2008. Asset impairment charges related to closing the facility have yet to be determined, but will be recorded in the financial quarter ending September 30. As of July 27, 2008, the net book value of manufacturing equipment at the Pittsburg location was approximately $13.2 million.
In addition, the company has cancelled 90 open positions and will lay off an additional 65 employees. The cost of severance related to this additional layoff is estimated to be $296,000. Together, these two actions will result in a reduction of 755 positions, or 29 per cent of Superior’s US workforce.
“Superior’s goal is to prosper, not just survive, as we work through one of the most challenging periods in the history of our industry. The essential actions announced today will enable us to maintain our strong leadership position now and well into the future, and to maintain our financial flexibility by protecting our cash-rich, debt-free balance sheet,” said chairman, CEO, and president Steven Borick.
“We believe the move towards more fuel efficient vehicles is a permanent shift, not merely a temporary phenomenon. The change in the light truck/passenger car mix requires adjustments to Superior’s manufacturing architecture. The plant closure is necessary to eliminate excess wheel production capacity, enhance our overall efficiency, and move production to other manufacturing plants to improve our global capacity utilisation.”
“We are acutely sensitive to the impact of these difficult but necessary actions on our employees, and we are taking a variety of steps to help ease the transition,” Borick said. Superior’s net income in the first quarter of 2008, despite a reduction in net sales, rose an impressive 55 per cent to $3,179,000.