Europe will be hardest hit by Lear Corp.'s decision to close 18 plants and cut nearly 5 percent of its workforce.
Fifteen of the affected plants are in Europe. Two are in North America and one is in South America. The Southfield, Michigan-based seating supplier plans to cut 2,800 jobs - 1,700 in Europe - and take a larger-than-expected restructuring charge of $133 million in the fourth quarter. It has 200 factories worldwide.
Lear's 11 acquisitions in four years have left duplications of employees, administration and manufacturing. It also faces growing competition for seating business and pricing pressure from its largest customer, General Motors.
Ken Way, Lear chairman and chief executive, said the cuts were necessary to prepare for a potentially 'more challenging environment.'
In July, Lear announced that it will concentrate its European seat-cover sewing operations in Palmela, Portugal. It will build three new plants there and increase its workforce to over 4,000 by 2000. The expanded plant will replace several operations spread around the continent, and will supply most of Lear's European customers.
'Lear's goal is to have its plants and machinery in the right place to be a low-cost provider,' said analyst Jesse Levine of the Ann Arbor, Michigan, office of Seidman & Co.
Lear warned of the restructuring in a statement reporting disappointing third-quarter results. Sales climbed to $1.9 billion for the quarter, up from $1.6 billion for the year-ago period. But profit margins were just 1.1 percent, compared with 2.2 percent for the year-ago period. According to Levine, that suggests pricing or production problems - or both.