Tenneco has announced that it will record a restructuring charge of US$15m in the second quarter for projects to improve distribution and manufacturing operations. The company estimates it will record approximately US$8m of the charges during the second quarter of 2006 and an additional US$7m over the next four quarters. The company estimates these actions will result in annual savings of approximately US$10 million when completed.

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“We continue to generate top-line growth while reducing costs and improving our operational efficiency,” said Mark P. Frissora, chairman, CEO and president, Tenneco. “Our ongoing restructuring activities are driven by our successful Lean manufacturing and Six Sigma initiatives and our continuous efforts to optimize our global distribution and manufacturing footprint.”


The second quarter restructuring costs are for restructuring activities taking place at about 20 locations worldwide, aimed at improving efficiency, reducing costs and sizing operations to better reflect local market conditions. The restructuring charges include an estimated US$4m for severance costs and other benefits related to employee layoffs and US$4m for other restructuring and related costs including closing plants, plant relocations and asset impairments.


The company estimates that roughly US$7m of the annual savings are the result of efficiency improvements and cost reductions and US$3m driven by activities to size operations to local market conditions.


The locations with the greatest impact have already been announced locally including headcount reductions at the company’s Adelaide, Australia operations to reflect lower OE production in Australia; consolidation at its Etain, France facility; closing of the Sterling Heights, Michigan just-in-time facility; discontinuation of the company’s Martorell, Spain just-in-time operations; consolidation and sale of the company’s Harrisonburg, Virginia aftermarket distribution center; and the continued integration of Tenneco’s recent acquisition of the Gabilan exhaust manufacturing company.

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At the same time Tenneco announced that it has won new customers for its aftermarket business in North America. The company is expecting to generate around US$8m in revenue annually from 13 new customers, with initial orders generating US$4m in revenue in the second quarter of 2006.


The company said its targeted sales efforts have established new long-term relationships with customers for its ride control, exhaust and brake products. Tenneco expects to record charges associated with changing over these new customers of approximately US$6 million in the second quarter of 2006.