Saturday, January 30, 1999
Clermont County plant to close
LucasVarity brake facility employs 230
BY MIKE BOYER
The Cincinnati Enquirer
LucasVarity Plc, which has agreed to be acquired by TRW Inc., plans to close its drum-braking manufacturing plant in Mount Carmel by early next year, eliminating 230 jobs.
Officials of the company's Livonia, Mich., automotive division notified employees Thursday. Patrick Fitzgerald, spokesman for the British-based brake manufacturer, said the plant closing was unrelated to the impending deal with TRW.
“This provides us a better way to use our capacity,” he said. He said employees — who aren't represented by a union — would receive severance benefits and help in finding new jobs.
He said the work now done at the 82,000-square-foot Clermont County plant would be shifted to other plants in Mount Vernon, Ohio; Koblenz, Germany; and Queretaro, Mexico.
Employees, who declined to be identified because they said it could jeopardize their severance, said the announcement caught them by surprise.
LucasVarity is the second large plant shutdown in Clermont County in as many months. Brazos Sportswear Inc., which filed for Chapter 11 bankruptcy reorganization last week, announced in December that it was closing its 460-employee plant in Batavia Township by mid-February.
Denny Begue, president and chief executive of the Clermont County Chamber of Commerce, didn't return phone calls for comment Friday. The county's unemployment rate is about 3 percent, less than the national average.
SG Securities analyst Zafar Kahn told Bloomberg Business News that the LucasVarity plant shutdown, slated to begin in May, would save $10 million to $15 million annually.
“They're moving to low-cost manufacturing,” he said.
Analysts said LucasVarity, the second-largest auto brake manufacturer, hasn't performed up to expectations since its 1996 creation in the merger of Lucas Industries and Varity Corp.
Last year, the company had earnings of $224 million on revenues of $6.5 billion after losing $278 million in the prior year.
In the face of global auto industry consolidation, auto parts manufacturers are under growing pressure from carmakers to cut costs and deliver parts in larger systems. LucasVarity, which was in talks with several auto parts makers, Thursday agreed to be acquired by Cleveland-based TRW for $6.6 billion.
But rival suitor Federal-Mogul Corp. said Friday that it might sweeten the $6.5 billion cash and stock offer rejected earlier this week by LucasVarity.
Also Friday, LucasVarity said it would close its Lucas SEI Wiring Systems joint venture with Sumitomo Electrical Industries Ltd. in South Wales this year, eliminating about 750 jobs.
Earlier this month, LucasVarity announced the closing of a plant in Fenton, Mich., employing 460, which makes switches and other electrical components.
And last year, LucasVarity shifted production of heavy-vehicle braking components from the Mount Carmel plant to a Dayton, Ohio-based division which is being sold to Meritor Automotive Inc.
The Mount Carmel plant, which opened in 1982, produces drum brakes and other components for Ford, Honda and Nissan. LucasVarity leases and doesn't own the plant, Mr. Fitzgerald said.
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