Superior Industries International Inc., an aluminum wheel supplier to most major U.S. and foreign automakers, said Tuesday that it would close its plant in Van Nuys by the end of the second quarter and fire 290 employees, or 9% of its workforce.
The company, which expects to save $16.5 million annually in labor costs, said it was making the cuts because the slumping vehicle sales mean less demand for wheels.
Chief Financial Officer Erika Turner described employee reaction as "somber but not surprised."
"Manufacturing has fallen in our Van Nuys plant in the last year," said Turner, who noted that analysts have predicted a 25% decrease this year in Superior's production. "Our employees were already concerned."
The mood was much different when Superior opened in Van Nuys four decades ago. With lower wage-and-benefit packages than competitors, Superior's ability to manufacture less-costly aluminum wheels appealed to automakers. With aluminum wheels one-third lighter than steel, Superior's product appealed to drivers.
For the first nine months of 2008, however, Superior's revenue fell 28% to $163.5 million compared with $227.6 million in the same period in 2007. Superior, with about 3,200 workers in five plants, lost $11.2 million from January through September, and shipments dropped to the lowest level in 10 years.
Severance and related costs for 2008 will total about $2.1 million, Superior said. Related asset impairment charges have yet to be determined but are expected to be recorded in the company's fourth quarter ended Dec. 28. Superior hasn't said when those figures will be released.
Like many auto-related companies, Superior is expected to face considerable challenges this year, according to a report from Brett Hoselton, an analyst at Cleveland-based KeyBanc Capital Markets. Hoselton projects Superior will lose 94 cents a share this year and 50 cents in 2010. His report indicated the company lost 46 cents a share in 2008.
Suppliers provide about 70% of the content in most automobiles, including seats, specialized bolts on the suspension and wheels. According to a Superior financial report, Ford Motor Co., General Motors Corp. and Chrysler represented about 78% of the company's total wheel sales during the first three quarters of 2008.
