Automotive seating supplier Adient said it will move forward with a flatter organizational structure and a regional focus following its fiscal second-quarter net loss of $149 million.
The company disclosed in a regulatory filing May 7 that it realigned its organizational structure to manage its business primarily on a geographic basis, resulting in a change to reportable segments. These new segments include the Americas, which includes North and South America; Europe, Middle East and Africa; and Asia Pacific and China.
Adient's new CEO, Douglas Del Grosso, told investors that Adient's approach includes putting in place general managers who have complete autonomy and responsibility of their assigned region. The company also essentially replaced the front-line operating team except for Asia, which continues to perform well, he said.
In addition, Adient increased its bench strength with several external hires to accelerate the turnaround, Del Grosso said.
"Speed and focus are the primary reasons for making the change," he said. "We implemented the new organization to drive change, to do it quickly, and within specific areas — namely commercial discipline and operational performance."
Adient's new organizational direction drove reductions in central departmental costs, as well as reductions in informational technology spending, he said. Adient's next steps call for integrating various operating groups into areas such as seating, seat structures and engineering.
Del Grosso said he expects the company to achieve about $90 million in annual savings once the organization plan is fully implemented.
It was not immediately clear how many jobs Adient has targeted for cuts in the restructuring. As of its last disclosure, on Sept. 30, the company employed 85,000 people — 70,000 hourly and 15,000 salaried. Total employment was about the same a year before, but the company listed 68,000 hourly and 17,000 salaried workers.
Del Grosso became Adient's CEO in October, replacing Fritz Henderson, who became nonexecutive chairman. He previously led a turnaround at chassis supplier Chassix. Del Grosso also spent 23 years at seating supplier Lear Corp., where he rose to COO before departing in 2007.