Supplier ArvinMeritor on Friday announced a further workforce cut.

The company said its expects to save US$125m a year with new measures that include axing 1,250 employees, or approximately 7% of its global workforce. These are 450 salaried and 800 hourly positions, including full-time, contract and temporary workers.

The supplier said it was also looking at alternatives to the previously announced spin-off of its Light Vehicle Systems (LVS) business group.

"Swift and decisive actions are necessary in response to today's global economic conditions, which include softness in all markets in which we participate, as well as weaker foreign currencies," said chairman, CEO and president Chip McClure.

"We believe the actions we are announcing today, as well as the progress we have made over the last several years to improve our cost structure solidly position our company to address the weakness we are seeing in the market place," said McClure. "I am confident that when the global economies and our industry stabilise we will be a stronger, more focused company."

In the last four years, the company has consolidated and/or closed 17 North American and European manufacturing facilities; divested non-core businesses; reduced its global workforce by approximately 4,000; and implemented a business transformation program called 'Performance Plus'.

"We are pleased that in a very tough environment we were successful in achieving our Performance Plus cost savings target of $75m in 2008," said McClure. "We are also continuing to make strides in executing our profitable growth strategy by expanding our global presence and growing our CVS aftermarket, specialty, and military businesses."

Last May, ArvinMeritor said it would spin off its LVS business to shareholders, subject to satisfactory financial and automotive market conditions.

"Although the LVS spin-off continues to be an option, ArvinMeritor is investigating other alternatives to achieve the separation, including a potential sale," it said today.

"We continue to believe that separating our two business groups will unlock significant value for our shareowners and strengthen the competitive position of both businesses, but due to today's difficult environment we are pursuing additional approaches to achieve a separation," McClure added.