SKF has decided to close its bearing plant in Aiken, South Carolina, and its seals plant in Springfield, South Dakota, in the US. The bearing production will be transferred to SKF's bearing plant in Puebla, Mexico and seals manufacturing to the seals plants in Elgin, Illinois, USA and Guadalajara, Mexico. The two plants in Aiken and Springfield manufacture products for the North American automotive industry and some 460 employees will be affected.
The phasing out process is expected to take place over a period of 18 months.
The restructuring of the US automotive industry and the weaker marketplace have led to strong pressure on the profitability for many companies supplying this industry. To reduce cost and to remain competitive SKF has decided to consolidate its US operations.
- Our OE automotive business in the US is under very tough pressure and we need to take these measures to restore our profitability in the US, says Tryggve Sthen, President SKF Automotive Division. This will enable us to continue to service the US market in an efficient way. The total restructuring cost for this programme is estimated to some SEK 280 millions, of which approximately SEK 190 million will be charged to the profit and loss account in the second quarter 2005. The remaining SEK 90 million will occur gradually during the 18-month period. The amount affecting cash flow of the total restructuring cost is approximately SEK 100 million. In addition, there will be investments in the factories receiving production, amounting to some SEK 40 million.
The profit in the second quarter 2005 will also be affected by one time gains related to the disposal of the shares in the previous subsidiary FlexLink and to the Ovako Steel transaction, in total some SEK 100 million.
Consequently the negative net effect on the SKF Group's operating profit in the second quarter 2005 will be approximately SEK 90 million.
Göteborg, June 29, 2005
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