Trelleborg's shake-up will continue

Jens Meiners, Automotive News Europe

Munich, Germany -- Trelleborg AB could sell off parts of its loss-making automotive division.

"There are some major parts of the business where we are [analyzing] whether we should remain or not," Trelleborg CEO Peter Nilsson said during a telephone press conference last week.

The Swedish engineering company reported that 2006 sales rose 13 percent to 27.28 billion kronor (€2.96 billion) but operating profit slipped 15.3 percent to 1.5 billion kronor. Much of the loss came from its automotive division, where operating profit plunged 54.6 percent to 214 million kronor on sales of 9.49 billion kronor.

The company blamed the decline on rising prices for raw materials and production cuts by the US Big 3 automakers.

Trelleborg's automotive unit is based in South Haven, Michigan, USA. It makes engine-cooling, air-supply and acoustic-management systems for cars and trucks.

Trelleborg's other three divisions - engineering systems, sealing solutions and wheel systems - increased operating profit last year.

Trelleborg began an 875 million kronor restructuring of its automotive unit last November. It will close two plants in the UK and may shut a factory in Mannheim, Germany.

"The restructuring program is necessary to restore the profitability within Trelleborg Automotive," company spokeswoman Viktoria Bergman said.

Production done at the company's antivibration systems plant in Trowbridge, England, will move to its plants in Romania and Spain. About 150 jobs will be lost when the factory shuts down in the middle of the year.

Work done at Trelleborg's sound damping systems plant in West Thurrock, England, will be transferred to its plants in France and the Czech Republic.

The company's factory in Mannheim, Germany, could shrink or be closed. It is a technical and sales office with prototyping and testing capabilities.

"Mannheim is part of the program, with the aim to restructure and re-size the unit," Bergman said.

Nilsson said Trelleborg was "on track" with the Trowbridge closure and the restructuring of Mannheim was "moving in the right direction."

"We continue to have organic growth," Nilsson said. "We expect to outgrow the market. The challenge is more on the margins."

The company, which is based in Trelleborg, Sweden, has about 24,000 employees in 40 countries. Its automotive division employs about 9,500 people at factories in North America, Europe, China, South America, India, Turkey and Korea.

From Automotive News Europe (A Crain publication)