UK: Global downturn hits GKN auto business
UK-based automotive, engineering and aerospace group GKN on Wednesday said conditions in global automotive markets had continued to deteriorate since its last update in November, leading to losses in its auto business in the last two months. It has so far laid off 2,800 workers world-wide, 254 of them here in the UK.
"All GKN's automotive plants were working short time and implementing additional shut-down periods throughout the last two months of the year," the Redditch, Worcestershire-based company said in a trading update.
"Activity levels for the last two months of the year in our automotive business, including powder metallurgy, were down approximately 30% compared with the prior year. Our automotive business was loss making in both November and December."
It has so far cut 242 UK jobs from its four UK factories manufacturing car parts in the West Midlands and Telford, Shropshire, that currently employ 1,900 permanent staff, a spokesman for GKN told just-auto.
He confirmed further cuts were likely.
"In the final quarter of 2008 the group's automotive businesses were severely impacted by the sharp global decline in automotive demand. The management response has been swift and wide-ranging," GKN said in its statement.
"Since October 2008, the company has released around 2,800 people from its workforce globally, including temporary, agency and permanent employees. Short-time working arrangements have been negotiated and implemented worldwide.
"Our 2008 results will include exceptional non-cash asset impairments of around GBP150m and around GBP10m cash based restructuring charges.
"In addition, further restructuring actions are being implemented during 2009. This programme of actions, which remains in part under review as the market outlook is still uncertain, will comprise significant short-time working/plant shutdowns, selected headcount reduction programmes and further structural rationalisation of elements of our manufacturing footprint and invested capacity."
Nonetheless, GKN, whose UK operations produce a wide variety of engineered products from Land Rover chassis frames to Airbus aircraft wings, expects revenues for the year ended 31 December 2008, including subsidiaries and joint ventures, to be up by around 12%, including currency benefits.
Profit before tax is expected to be towards the higher end of the range of GBP150m to GBP170m indicated in its last update on 24 November.
Looking ahead, GKN said it expects to incur an estimated GBP120m of cash-based charges in 2009, predominantly due to redundancy and "time-bound short-time working".
The programme restructuring programme should generate cost savings of around GBP120m in cost saving this year.
"Our restructuring actions will continue in 2009 and deliver significant cost savings which will help reinforce the Group's resilience, in the face of the global economic downturn," GKN said.