Citing volatility of the heavy duty truck market, Eaton Corp. said it will restructure its worldwide truck business this year.
In the NAFTA markets, the company plans to refocus attention on technologies "critical to product performance and customer satisfaction." Fixed capital intensity of the business will be "significantly reduced" and the organization structure will be simplified. The salaried workforce within Truck Components will be cut by about 100. This is in addition to some 1,800 salaried and non-salaried positions eliminated since early 2000.
Eaton said it will go ahead with construction of a new plant in San Luis Potosi, Mexico, but completion will be postponed by about six months. It will cease production of its European "S" Series transmissions sometime this year and may close the Eaton S.A. facility in St. Nazaire, France.
The medium duty transmission plant in Aycliffe, U.K., will be closed by mid year as part of a restructuring announced earlier. All operations will be transferred to Eaton's Gdansk, Poland, plant.
"Eaton’s Truck Components business needs to evolve to a business model that is less vertically integrated, takes better advantage of our global presence, and focuses on those areas where Eaton brings genuine distinctiveness to the marketplace," said Chairman and CEO Alexander Cutler.
"This is a strong and vibrant global business," added Thomas O'Boyle, senior vice president and group executive for Truck Components. "We are restructuring the business to weather the current cyclical downturn and to take best advantage of the secular growth we see continuing well into the future."
Eaton will take an estimated $55 million restructuring charge during 2001, including $40 million in the first quarter. Recurring annual savings from the restructuring are anticipated to reach $40 million with a payback period of approximately 18 months. When the restructuring is completed in 2-3 years, "the result will be a heavy transmission business that is far more flexible, with 20% less fixed capital employed," Cutler said.
In the NAFTA markets, the company plans to refocus attention on technologies "critical to product performance and customer satisfaction." Fixed capital intensity of the business will be "significantly reduced" and the organization structure will be simplified. The salaried workforce within Truck Components will be cut by about 100. This is in addition to some 1,800 salaried and non-salaried positions eliminated since early 2000.
Eaton said it will go ahead with construction of a new plant in San Luis Potosi, Mexico, but completion will be postponed by about six months. It will cease production of its European "S" Series transmissions sometime this year and may close the Eaton S.A. facility in St. Nazaire, France.
The medium duty transmission plant in Aycliffe, U.K., will be closed by mid year as part of a restructuring announced earlier. All operations will be transferred to Eaton's Gdansk, Poland, plant.
"Eaton’s Truck Components business needs to evolve to a business model that is less vertically integrated, takes better advantage of our global presence, and focuses on those areas where Eaton brings genuine distinctiveness to the marketplace," said Chairman and CEO Alexander Cutler.
"This is a strong and vibrant global business," added Thomas O'Boyle, senior vice president and group executive for Truck Components. "We are restructuring the business to weather the current cyclical downturn and to take best advantage of the secular growth we see continuing well into the future."
Eaton will take an estimated $55 million restructuring charge during 2001, including $40 million in the first quarter. Recurring annual savings from the restructuring are anticipated to reach $40 million with a payback period of approximately 18 months. When the restructuring is completed in 2-3 years, "the result will be a heavy transmission business that is far more flexible, with 20% less fixed capital employed," Cutler said.
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