Collins & Aikman Corp. is shaking up its European operations, closing more plants in North America and cutting 700 jobs in the third quarter in an attempt to recover its financial footing.
The company, which went through a growth spurt at the end of 2001 with the acquisition of Textron Inc.'s automotive trim division, has been hampered by restructuring costs and a stock price that has bottomed out and refused to budge for months.
The decline continued in the third quarter, with a net loss of $45.2 million on sales of $922.5 million and an operating loss of $4.3 million.
President and Chief Executive Officer Jerry Mosingo, who took the top job in August in a management shake-up, said C&A is working hard to bring its costs into line and shore up its business plan.
``This is a powerhouse of a company,'' Mosingo said in a Nov. 14 conference call with analysts. ``Our market strengths are being recognized. The key for us will be to convert our strong sales base to strong profitability.''
The Troy, Mich., firm can see long-term benefits of its restructuring plan, Mosingo said, which must include ``significant decisions'' to better position the firm.
The company also has ended what it called an extended enterprise relationship with competitive interior supplier Johnson Controls Inc. Mosingo said the deal added more costs than benefits to Collins & Aikman.
The arrangement had Collins & Aikman handling simple molded parts for JCI, produced both in-house and by other molders. That work sometimes required C&A to invest in capital improvements that offered little in return, Mosingo said. ``We plan to redeploy these manufacturing assets to higher-return projects,'' he said.
The company will have a continuing relationship with JCI in manufacturing, but the relationship is evolving, he said.
Two North American plastics operations targeted for closure are in Gananoque, Ontario, and O'Fallon, Mo., and an acoustics plant in Marshall, Mich., also will close. Work at each of those factories will transfer to other Collins & Aikman sites.
In Europe, the firm is closing plants in Sweden, Belgium and England, as well as its European corporate headquarters in Frankfurt, Germany. The bulk of the closures involve nonplastics operations, including a carpet facility in Newcastle, England, and headliner production in Sweden.
The firm also is exporting the lean manufacturing techniques that have won C&A notice in North America to Europe.
``Our costs were simply too high in Europe and our expertise was too low. We had not sufficiently transferred our technology and skills,'' Mosingo said. ``We are correcting this problem as we speak.
``There is no reason we cannot turn around our European operations. Fixing Europe is one of the biggest problems we have in this company.''
Those problems also involve Collins & Aikman's Italian facilities, which are jointly owned with Textron. Those six plants are tied closely to the fate of Italian automaker Fiat Auto SpA, itself struggling for survival. The supplier has been in talks with Fiat and may pick up more work as Fiat consolidates, said Chief Financial Officer Michael Stepp.
Collins & Aikman aims to retain all of its European business, transferring work to other plants.
Company stock, which was trading above $20 a share following a reverse stock split earlier this year, fell throughout the summer, sinking to a low of $2 immediately following the departure of Tom Evans from the CEO's office. It recovered briefly, but has been mired between $2.50 and $3 for most of the fall.
