Ford officially takes back Visteon plants
By Dee-Ann Durbin / AP Auto Writer
Paul Sancya / Associated Press
Ford's Al Ver
DETROIT -- Ford Motor Co. took control of auto supplier Visteon Corp. on Saturday in a deal designed to ensure its supply of parts and make Visteon profitable.
Ford spun off Visteon, its former parts division, in 2000. It is placing the Visteon facilities -- including 14 U.S. plants and three plants in Mexico -- into a holding company that will have 25,000 employees and $7 billion in annual sales.
The holding company includes 18,000 hourly U.S. workers and 2,000 hourly and salaried workers in Mexico. It plans to reorganize the plants, use buyouts to cut 5,000 hourly workers, then sell the plants to companies that will continue supplying parts to Ford. The facilities produce some of Visteon's less profitable parts, including chassis, glass and fuel tanks.
"Success looks like finding homes for each of these businesses. Success looks like selling every one of them, not closing them," said Al Ver, a vice president for manufacturing engineering at Ford who has been named chief executive officer of the holding company. "If I'm successful, I go out of business."
Visteon said it needed help from its former parent because it was saddled with expensive labor agreements and wanted to concentrate on more profitable businesses, including climate systems, electronics and auto interiors. Ford announced in May that it would take back the Visteon plants and pay the supplier $550 million in restructuring costs.
Ver said 65 companies have expressed interest in buying the facilities, including foreign suppliers who want a larger North American presence, domestic suppliers who want more Ford business and private equity groups who see the facilities as an investment opportunity.
Ford has said the deal could eventually save it $600 million to $700 million on parts by the end of the decade. But it expects to incur charges of $450 million to $650 million this year and $300 million to $500 million between 2005 and 2009 related to the buyouts of the hourly workers.
The agreement transforms Visteon from a company with $18 billion in revenues to one with $11 billion, and it will reduce the portion of Visteon's business that comes from Ford from 70 percent to 50 percent. Nissan Motor Co. and Hyundai Motor Co. are Visteon's two other largest customers.
The average hourly wage at Visteon's plants will drop from $38 to $17, and the number of its hourly employees covered by the United Auto Workers will drop from 17,400 to 5,000.