1,100 Jobs to go in Tenneco Restructuring

Automotive emission control and ride control products manufacturer Tenneco Inc. is to restructure its global operations. In an announcement made on October 29, the company said it would further reduce structural costs and capacity in response to the worsening industry downturn. Approximately 1,100 jobs will be axed as a result of the restructuring and five facilities closed. In total Tenneco expects to generate around US$64 million in annual savings once all changes are fully implemented.

The company intends to close four North America manufacturing facilities, ‘restructure’ another manufacturing plant in North America, and close its Dunsborough, Australia engineering operation. The combination of these closures and other operational and administrative restructuring actions across Tenneco’s global operations will eliminate approximately 500 salaried positions and 600 hourly positions. The company anticipates completing this restructuring by the end of 2009.

Tenneco estimates it will record up to $60 million in charges – approximately $44 million in cash – related to the restructuring initiatives announced today, $25 million of which it expects to record in the fourth quarter and the remainder through 2009.

The latest actions are, says Tenneco, incremental to regional restructuring programmes initiated earlier in 2008. These programmes, which have eliminated more than 1,150 positions worldwide, are said to have been implemented to address OE production volume declines and other market-changing conditions.

“The current global economic crisis and dramatically falling consumer demand for vehicles around the world are accelerating a downward shift in build rates in most regions globally,” said Gregg Sherrill, chairman and CEO, Tenneco. “We sincerely regret the impact of these restructuring actions on our employees, but we must act quickly by better aligning our operations with the new realities of the market.”

The North America manufacturing plants recommended for closure include the company’s Milan, Ohio elastomer facility and its Evansville, Indiana original equipment (OE) emission control just-in-time facility. The company also expects to close an OE ride control plant and another OE emission control just-in-time facility in the United States, as well as restructure a North America OE emission control plant. The unnamed locations will be announced in the near future.

Additionally, Tenneco plans to: Accelerate working capital improvement opportunities; implement targeted reductions in capital spending; step up its Six Sigma and Lean manufacturing initiatives to drive greater manufacturing efficiencies and costs savings; significantly reduce and re-prioritise information technology (IT) spending; cut aftermarket marketing and sales expenses; and implement other SG&A cost reduction actions.

“All of these actions are designed to position Tenneco to weather the current economic storm and capitalise on opportunities when the industry and global economies begin to recover,” Sherrill said. “Tenneco has a strong track record over the last nine years of responding successfully to difficult operating conditions, and I am confident we will once again execute on our plans and emerge a stronger, more profitable company.”

Tenneco said its long-term growth prospects remain strong, primarily driven by tightening emissions regulations worldwide as well as its strong position in growth economies like Brazil, Russia, India and China. The company intends to use available cash generated from operations as well as its revolving credit facilities to pay for the restructuring actions announced today, which have an expected cash payback of less than one year.