Ford and Visteon have reached definitive agreements to transfer unprofitable plants back to Ford. The transfer of 17 plants and six offices, research centers and other facilities in the U.S. and Mexico to Ford, Visteon’s former parent, is expected to take place on Oct. 1, the companies said in a statement.
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The agreements pave the way for a new, temporary, Ford-managed business entity, Automotive Components Holdings, LLC, to take control of the businesses on Oct. 1. Automotive Components Holdings will prepare most of the businesses for sale to companies with the capital and expertise necessary to supply Ford with components and technologies at competitive prices and high quality.
“The arrangement is a key element of Ford North America’s strategy to improve our cost structure while protecting the supply of components,” said Al Ver, Ford vice president and chief executive and chief operating officer, Automotive Components Holdings, LLC.
“We are preparing business plans for each business to address the gaps with its key competitors. We must move aggressively and quickly to prepare these operations for sale to companies that can take them forward,” Ver added.
The agreements include the financial arrangements previously announced by the parties on May 25 as part of the Memorandum of Understanding, including the support that Visteon will provide to the new entity through service contracts and leased salaried employees.
All of the U.S. employees of Automotive Components Holdings, LLC will be leased employees. About 5,000 Visteon salaried employees, located mostly at facilities that will be part of the transfer, are expected to be assigned by Visteon to work directly with the new company. In addition, about 70 Ford salaried employees will be assigned to the company, as will about 18,000 Ford UAW hourly employees currently working in Visteon facilities. Ford is expected to implement 5,000 buy-outs over time for Ford UAW employees to achieve efficiencies.
Visteon has failed to make a profit nearly every year since it was spun off from Ford five years ago. The second-largest U.S. auto supplier, based in the Detroit suburb of Van Buren Township, reported $18.7 billion in revenue and $1.5 billion in losses last year.
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By GlobalDataVisteon said when the transfer plan was announced in May that it would pay $550 million in restructuring costs as part of a deal that could eventually save Ford millions on parts.
