Meritor said on Thursday it would close its European trailer axle business on 31 July, 2011 and estimated that charges in the range of US$17m to $23 million would result over the next year, $12m to $18m in cash.
“This decision is driven by the competitive nature of the European trailer axle market which requires significant scale to address increasing cost challenges,” said Joe Mejaly, president, aftermarket and trailers at Meritor.
“In addition, following the decline in recent years, the market for commercial vehicle trailers is recovering more slowly than other sectors. After an extensive review process, we have concluded that we will be unable to achieve acceptable financial returns on a sustainable basis and that future investment would be better deployed to other businesses,” added Mejaly.
“We recognize the impact of this decision on our workforce. We will do our utmost to assist them during this transition.”
In total, 171 employees are affected. In addition to the company’s main trailer axle manufacturing operation in Cwmbran, United Kingdom, Meritor also has trailer employees located in France, Italy and Spain.
“We are appreciative of the long-term relationships we have maintained with our customers in the European trailer business and are taking steps to mitigate the challenges this action may present,” said Mejaly. The company also remains committed to customer service through its global aftermarket business. Service parts will continue to be available and warranties will be honoured.
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The company’s facility in Cwmbran, United Kingdom, is also home to Meritor’s ‘centre of expertise’ for the design, development and manufacture of braking systems and components for the commercial vehicle truck market. In September 2010, the company announced its intent to invest $42m to advance its foundation brake position in Europe. The brake business in Cwmbran is unaffected by the closure of the European trailer axle business.
Meritor’s trailer axle manufacturing operations in North and South America, including the company’s Suspensys joint venture in South America with the Randon S/A group, are also unaffected.