TROY, Mich. — Truck and auto parts supplier ArvinMeritor Inc. said Friday it will cut 1,250 jobs in an effort to lower costs as it faces continued weakness in the U.S. economy and automotive industry.
The Troy, Mich.-based company said the cuts, which include 450 salaried and 800 hourly positions, represent about 7 percent of its worldwide staff. Most of reductions have already been completed, while the rest are in process, ArvinMeritor said.
The job actions are expected to cost about $35 million, ArvinMeritor said, but will save about $125 million next year in combination with other cost-cutting efforts.
ArvinMeritor Chief Executive Chip McClure said the "swift and decisive" actions are needed because of softness in all markets and weaker foreign currencies.
"We believe the actions we are announcing today, as well as the progress we have made over the last several years to improve our cost structure solidly position our company to address the weakness we are seeing in the market place," McClure said in a statement.
ArvinMeritor also said it's looking at alternatives for its light vehicle systems unit, including a potential sale. In May, the company said it planned to spin off the segment.
KeyBanc's Brett Hoselton backed his "Buy" rating on the stock, calling the news positive overall in light of the additional cost savings and reduced financial risk.
But Hoselton noted that the proposed sale of the company's light vehicle systems business may not be a good idea. Investors had favored a split of the company and the company could face difficulty selling the business.
ArvinMeritor's news comes at a time when most U.S.-based auto suppliers are reeling from drops in U.S. and European automotive production that have significantly cut into their sales.
Also Friday, American Axle & Manufacturing Holdings Corp. said it swung to a $440.9 million third-quarter loss, blaming hefty restructuring charges and a steep drop in light truck production.
On Thursday, TRW Automotive Holdings Corp., Lear Corp. and Visteon Corp. all reported quarterly losses, also citing U.S. and European production cuts.
Looking ahead, ArvinMeritor said it will record a charge of about $190 million in the fourth quarter for certain deferred tax assets. As a result, it expects to post a loss for fiscal 2008. Excluding the charge and other special items, the company still expects results for the year to be in line with previous projections.
In September, the company forecast 2008 earnings from continuing operations between $1.55 and $1.65 per share. Analysts polled by Thomson Reuters expect a profit of $1.56 per share, on average.
ArvinMeritor is scheduled to release its fiscal 2008 results on Nov. 18.
ArvinMeritor shares rose 15 cents, or 2.8 percent, to $5.50 in midday trading.