Superior Industries likely to decide German plant’s fate in 2023

As reported yesterday, a wholly owned subsidiary of Superior Industries International has commenced insolvency proceedings in Germany. The outcome of this process will decide the fate of the company’s Werdohl aluminium wheel manufacturing facility, and Superior will make its decision within a matter of months.

Speaking during an Investor Update Call on 31 August, company president and chief executive officer, Majdi Abulaban, explained that Superior Industries has taken the first step of a two-step process. “It’s a legal process and a court administration to execute on a plan to improve performance. We have set targets on SG&A and other operating performances, targets on growth, and we’re commencing to execute on that plan.

A key action that Superior Industries is taking is the implementation of a revised operating plan to reduce costs, enhance revenues and to better meet critical customer needs. “So should that plan not materialise in the results we expect, we will move to the next step, and possible action in the next step would be the closure of this facility and moving the business from Germany into Poland.”

In regard to the timeframe involved, Abulaban stressed that the current proceeding with its court-appointed administrator is “not a one-year process,” rather it will be “a few months” of working together with the Werdohl plant’s works council. “We have secured a plan and we will go back to the courts and give them an update about the outcome…our planning is such that we expect to have this resolved by the end of the year or very shortly thereafter.”

Prior measures insufficient

The Werdohl facility operated by Superior Industries Production Germany makes between 800,000 and a million rims annually, and Abulaban notes that while these tend to be complex products they are “nothing highly different” to rims manufactured in Poland. But energy prices in Germany are amongst the highest in Europe – more than double those in Poland in 2022 – and this, along with factors such as decreased vehicle production, has caused problems for Superior Industries Production Germany in recent times. Abulaban confirmed that measures already taken to improve the business’s performance, including the streamlining of manufacturing processes, reducing backlogs and overhead costs, have “not been sufficient to adequately reduce our manufacturing and administrative cost structure.”

Abulaban did not greatly elaborate on the process that commenced on 31 August; however, he did mention that Superior Industries was now looking to repeat the operational improvements that have benefitted its North American operations in the last few years. He also noted that Germany’s government will “support that process” in some form. “I don’t want to get into details about how the government participates, but at the end of it, if it does not work, if it does not create a competitive business, we go to the next phase,” he reiterated.

The president and chief executive also confirmed that production in Werdohl will continue during the proceedings. Superior Industries’ other German operations and aftermarket business are not part of these proceedings.