DETROIT -- Meritor Inc., the commercial-truck, trailer, defense and automotive aftermarket supplier, said it will close its European axle business by the end of July because of poor performance in the region.
The closure of the trailer axle manufacturing operations at its Cwmbran, Wales, plant will affect 171 employees, including those in France, Spain and Italy. To shut down the business, Meritor is expected to incur charges of $17 million to $23 million.
"This decision is driven by the competitive nature of the European trailer axle market, which requires significant scale to address increasing cost challenges," Joe Mejaly, president of aftermarket and trailers, said in a statement. "In addition, following the decline in recent years, the market for commercial-vehicle trailers is recovering more slowly than other sectors.
"After an extensive review process, we have concluded that we will be unable to achieve acceptable financial returns on a sustainable basis and that future investment would be better deployed to other businesses."
Meritor's European brake operations in Cwmbran will be unaffected by the closure of its axle business.
The company also said Thursday that it was fined $100,000 earlier this month by the U.S. Department of Commerce's Bureau of Industry and Security for 14 export violations. Between August 2005 and November 2006, the company shipped axles and seal assemblies that are controlled for national security reasons to China and France. And on 12 occasions, it exported technical data also controlled for national security reasons to Italy, India, China, Mexico, South Korea and Brazil.
Meritor came forward to disclose the violations, the bureau said in a statement, probably resulting in a reduced fine.
After divesting its passenger-vehicle business, ArvinMeritor officially became Meritor as of Wednesday. Its ticker symbol on the New York Stock Exchange is now MTOR.