Auto supplier Lear targets $150M in layoffs, other cost reductions

Automotive supplier Lear Corp. [NYSE:LEA] said Wednesday it plans to implement aggressive cost reductions, including layoffs, to realize an additional $150 million in operating improvements over the next 12 months and deal with a deteriorating automotive market.

The specifics of the plan are to be provided when Southfield-based supplier of automotive seating, electrical systems and electronics reports its third quarter earnings Oct. 30. The company said it has drawn $400 million under its revolving credit facility to shield itself from disruptions in the credit markets, leaving more than $800 million available for borrowing.

The company earlier this month announced it was lowering its full-year sales outlook from $15 billion to about $14 billion and forecasting roughly 20 percent lower gross earnings.

Lear spokesman Mel Stephens said the staff reductions would include companywide permanent and temporary layoffs but declined to say how many.

"We have been aggressively reducing our costs," Stephens said. "We do that as a matter of general business. These actions are incremental in reaction to present conditions."

The company in a news release said planned actions would include the following:

• Reducing program development costs;

• Accelerating low-cost engineering and sourcing initiatives;

• More targeted investments in growth initiatives;

• Reductions in procurement, manufacturing, engineering and logistics costs;

• And consolidations in the company's supply base.

"Management's strategy is to take all actions necessary to withstand the current industry downturn, maintain our focus on strategic priorities and position the company for success when industry conditions improve," Bob Rossiter, Lear's chairman, president and CEO, said in a statement.

"Longer term, we see global growth in automotive demand, with mature markets expected to recover in 2010 and emerging markets continuing to expand. With our global capabilities, low-cost footprint, superior quality and leading technologies, we are well positioned for success in the future."

Lear said it had more than $500 million in cash at the end of the third quarter and reiterated its expectation of positive cash flow for 2008.

• Contact Sven Gustafson at (248) 374-4932 or sveng@mbusinessreview.com.