Aftermarket Technology reportedly will write off $US16 million to $20 million worth of assets and take a $2.6 million charge to close a plant in North Carolina after losing a remanufacturing contract from General Motors.
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According to CBS Marketwatch, Aftermarket said the noncash charge of up to $20 million, or 76 cents to 92 cents a share, would be recorded in the third quarter.
The Westmont, Illinois-based company supplied General Motors with remanufactured transmissions. With the loss of the contract, Aftermarket said it would close a facility in Gastonia, North Carolina, as soon as possible. It will take a one-time charge of $2.6 million, or 12 cents a share, primarily in 2004, the report added.
Starting Friday, 200 people would begin to lose their jobs due to the plant closure, Mary Ryan, Aftermarket’s vice president of investor relations and communications, told CBS Marketwatch. She said it wasn’t yet clear when the plant would be completely shut down.
Ryan reportedly added Aftermarket was advised by General Motors two days ago that it had decided to resource the remanufactured transmission work elsewhere. GM didn’t say why it decided to end the contract, she elaborated, nor was Aftermarket told which vendor, if any, will be awarded the work of rebuilding the transmissions.
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By GlobalData“We were losing money on this program,” Ryan told CBS Marketwatch. “From our financial perspective, it puts us in a better place.”
Tom Hill, a spokesman for GM, reportedly said the automaker typically doesn’t disclose where it decides to resource its business, though suppliers that have been awarded contracts can announce the new deals.
Aftermarket said in a statement cited by CBS Marketwatch that GM has historically been one of its smaller drivetrain-division customers. The company added that the automaker represents about $23 million, or 5%, of its expected 2004 revenue; for the first six months of the year, that contract resulted in a pre-tax operating loss of $2 million.
