Technitrol Announces Strategic Repositioning of Automotive Electronic Components Business

PHILADELPHIA--Technitrol has announced several actions to strategically reposition its automotive electronic components business for stronger growth and higher profitability in the global automotive electronics markets. This business is operated by Technitrol's Electronic Components Group. The company estimates (based on current customer composition and mix) that the cumulative actions described below will generate between $10 and $12 million in additional annual operating profit. These savings are expected to begin to be generated in the second half of 2007 and be fully phased in by the end of the first quarter of 2008.

To achieve these results, production operations located in Germany and Tunisia will be closed and that capacity relocated to facilities in the Peoples Republic of China currently operated by Technitrol's Electronic Components Group. The Germany and Tunisia factories, acquired as part of the ERA Group in early 2006, produce coils for automotive ignition and other electronic control applications aimed at both OEM and aftermarkets. In addition to significantly improving production economies, the move is intended to position the business to take full advantage of the rapidly growing automotive markets in China and other parts of Asia. Automotive suppliers in Europe and North America are increasingly sourcing or attempting to source components from China in order to lower material costs and improve or restore their profitability and prepare for inevitable competition from Chinese automotive manufacturers. China currently has very few electronic component suppliers as technologically advanced and quality driven as Technitrol's Electronic Components Group. As part of this repositioning, the Group also intends to significantly increase its sales and marketing efforts aimed at the rapidly growing Chinese automotive sector.

Technitrol’s Electronic Components Group, trading under the name Pulse(R), has been operating manufacturing facilities in China for more than two decades. It currently has more than 26,000 employees operating out of nine manufacturing sites from southern to northern China as well as a recently established facility in central China. In addition, the Group operates three sales offices and several significant design centers in China.

The Electronic Components Group's hub in Europe, which provides engineering, sales, marketing, finance and related support to all of the Group's European operations, will remain in Herrenberg, Germany. Accordingly, customers sourcing ignition and other automotive wound coil products which are used in advanced automotive electronic applications will enjoy the benefits of both local design, engineering collaboration, sampling and customer service in Germany as well as high-volume, high-quality, lower cost manufacturing in China from a western company with decades of operating experience in China.

The cost of the repositioning plan is currently estimated to be between $12 million and $13 million. Included in that estimate are severance charges of $1 million already taken in the fourth quarter of 2006. Over the remaining quarters of 2007, Technitrol will record additional charges covering severance, plant closure and other relocation expenses as the repositioning activities continue.

Based in Philadelphia, Technitrol is a worldwide producer of electronic components, electrical contacts and assemblies and other precision-engineered parts and materials for manufacturers in the data networking, broadband/Internet access, telecommunications, military/aerospace, automotive and electrical equipment industries. For more information, visit Technitrol’s Web site at http://www.technitrol.com.