DETROIT -- Dramatic global vehicle production cuts in the second half of 2008 stifled BorgWarner Inc.s record first half of the year financial performance, pushing the supplier into the red for quarterly and full-year results.
The rapid deterioration in business prompted the maker of various fuel-efficent transmission and turbocharger technologies in the fourth quarter to accelerate job cuts by an additional 1,500 positions to a total of 4,400.
BorgWarner said today it posted a net loss of $81.4 million on revenue of $931.5 million during the fourth quarter, down from net income of $71.2 million on revenue of $1.4 billion during the same period in 2008.
For the full year, BorgWarner posted a net loss of $35.6 million on revenue $5.3 billion compared with net income of $288.5 million on revenue of $5.3 billion.
Fourth quarter car and truck production in the U.S. dropped 28 percent in the fourth quarter and was down 19 percent for the year to 12.7 million vehicles.
Four-day work weeks
CEO Tim Manganello said BorgWarners job cuts include 2,400 positions in North America. He said it was tough for the company to match its costs fast enough to respond to global vehicle production cuts.
The company also has trimmed work weeks at many plants in Europe to four days, and is considering going to two- or three-day workweeks at some locations.
Executive officers and board members also saw their salaries cut by 10 percent.
Manganello said the company broke even on operating profit, excluding one-time charges for restructuring actions and warranty charges related to European transmission problems caused by a supplier.
The company said it took $112.5 million in one-time restructuring and asset reduction charges in the fourth quarter and $284.3 million for the year.
Spiking gas prices during the summer and slumping consumer confidence fueled global vehicle production cuts as consumers stopped buying new vehicles. That trend in the second half of 2008 buffeted strong demand for turbochargers and dual-clutch transmissions the company enjoyed in the first half of the year, Manganello said in a conference call.
Some good news
BorgWarner remains one of three suppliers in North America -- along with Magna International Inc. and Johnson Controls Inc. -- with investment grade credit. The company cited some improvements in business over the past year.
BorgWarner was awarded a major portion of Ford Motor Co.s new EcoBoost engine program, which uses gasoline direct injection and turbocharger technology to increase performance and fuel economy, essentially making a V-6 engine perform like a V-8, but with fuel economy of a V-6.
BorgWarner also announced in late 2008 it had formed a joint-venture with a consortium of 12 Chinese automakers to produce dual-clutch transmission modules. While the consortium is controlled by the Chinese government, BorgWarner holds a 66 percent majority stake in the project, and the 12 Chinese automakers represent more than 90 percent of the Chinese light vehicle sales market.
Manganello has said the companies will source dual-clutch transmissions exclusively from the joint-venture.
Production is slated to begin in 2011, and 1.7 million dual-clutch transmission modules are expected to be built at full capacity.
The companys outlook for 2009 is still cloudy, as it waits for vehicle production schedules from its customers to stabilize.
Still, BorgWarner expects to be cash flow positive and to post positive earnings in 2009, assuming that 9.3 million passenger vehicles are built in North America and 16.6 million are built in Europe.
Cuneo named to board of directors
Separately, BorgWarner on Wednesday announced that it has named longtime Toyota manufacturing executive Dennis Cuneo to its board of directors.
Cuneo, 59, now an attorney for the Washington, D.C., law firm of Arent Fox LLC, fills a vacancy on the company's board due to a director retirement in 2008, BorgWarner said in a statement.
Cuneo spent 25 years at Toyota, and most recently served as senior vice president of Toyota Motor North America. He played key roles in the expansion of Toyota's manufacturing operations in North America.
BorgWarner ranks No. 30 on the Automotive News list of the top 100 global suppliers in terms of worldwide sales to automakers.
Philip Nussel contributed to this story