By Jack Gurner
WATER VALLEY – BorgWarner Inc. is cutting about 1,000 people from its North American workforce due to declines in the auto industry. The announcement came last Thursday at the same time the company was reporting record second quarter earnings.
However, the second quarter earnings were driven by strong demand for the company’s fuel-efficient powertrain technologies in Europe and Asia which more than offset declines in North America.
“BorgWarner North American operations are being resized in response to a reduction in the second quarter in the US,” said Bill Liacone, plant manager for BorgWarner Air/Fluid Systems, Yalobusha County’s largest private employer.
“In Water Valley, the plans were carried out yesterday (Monday, Aug. 4),” Liacone said. “It affected salaried employees and it was roughly about two percent of our overall work force. There were 11 employees impacted by the reduction. That’s about two percent of 500 employees.”
Vehicle production is down 18 percent and BorgWarner sales in the US are down 17 percent, according to Liacone.
“BorgWarner believes these actions are necessary to make sure that we respond to the fundamental changes that are happening in the auto industry,” he added. “This is not something we are pleased about doing. It is a necessity to stay competitive in a very difficult market.”
A news release from the Auburn Hills, Michigan-based company, stated that not all aspects of the restructuring actions have been finalized. BorgWarner expects to incur pretax costs estimated in the range of $10 million to $12 million in connection with the restructuring actions.
These costs may include employee benefits and other incremental costs, if any, resulting from the restructuring actions. Savings from the restructuring are expected to be realized in the second half of 2008.