Federal Mogul Corp.fresh from a seven-year visit to Chapter 11 bankruptcy protection, is in trouble again. The prolonged auto industry decline has F-M once again facing the need to cut costs, streamline, and restructure operations.
The latest program will see F-M cut approximately 4,000 jobs, or 8% of its total worldwide workforce.
In a prepared statement, F-M said: "The planned actions are expected to occur as a result of several initiatives designed to streamline business processes, consolidate or close selected locations, and reduce general and administrative staffing."
But since Federal-Mogul provided no guidance as to when or where the jobs would be lost, the announcement has caused turmoil across its business units and communities hosting the company's plants. Entire facilities may be involved, but F-M gave no notice any effort would be made to sell rather than shutter any operations.
However, the company does apparently know enough about its plans to have budgeted up to $80 million for restructuring costs between now and the end of 2009.
During its Chapter 11 tenure, F-M closed nine facilities in the U.S. and Europe. But a new plant in India is currently under construction. Scheduled to come online by September 2009, it will manufacture light vehicle brake and friction components, commercial vehicle and railway friction products.
So far in 2008, F-M's results have been mixed. A first quarter loss of $32 million turned into a $90 million second quarter profit. Out of bankruptcy, FDML shares first traded at $26.05 on January 2, but have since plummeted to the low $7 range.
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