TRW Undertakes Aggressive Actions

29 July 1998

TRW Undertakes Aggressive Actions to Enhance Automotive Operating Margins

    CLEVELAND--July 29, 1998--TRW Inc. announced today aggressive actions aimed at enhancing operating profit margins in its automotive businesses.
    To accomplish the improvement, the company will implement the following actions:

- Close 10 to 15 percent of the company's 137 manufacturing plants located in 24 countries. - Reduce employment in the automotive businesses, currently at approximately 54,000 employees, by 7,500. - Eliminate $75 million, or 20 percent, a year of selling, general and administration costs. - Substantially reduce the company's cost of materials through more effective use of global sourcing and purchasing. As part of this process, the company expects to reduce its number of automotive suppliers by 50 percent over the next few years. - Improve productivity by reducing manufacturing costs by at least 25 percent over the next few years through the use of lean manufacturing practices and improved quality. - Reduce aggregate capital expenditures by at least $300 million over the next five years.

    "We are taking these actions to enhance TRW's competitive advantage and profitability in our automotive business," said Joseph T. Gorman, chairman and chief executive officer. "Our intent is to improve operating profit margins by 1.5 percentage points over the next two years, which will improve operating cash flow by approximately $100 million a year, facilitating a payback in less than two years."
    To implement these changes, the company will take pre-tax charges of $125 to $150 million over the next 18 months, of which approximately $25 million will be incurred during the remainder of 1998.
    "Lean manufacturing will continue to drive our manufacturing strategy, and we will give even higher priority to the implementation of these practices," said Peter S. Hellman, president and chief operating officer. "As to the plant closures, we are moving quickly to finalize our plans and will announce later the specific locations."
    TRW provides advanced technology products and services for the automotive, space and defense, and information technology markets. The company's news releases are available through TRW's corporate Web site (www.trw.com.)
    Statements in this release that are not historical facts are forward-looking statements, which involve risks and uncertainties that could affect the company's actual results. Information regarding the important factors that could cause TRW's actual results to differ materially from the forward-looking statements contained in this release can be found in TRW's reports filed with the Securities and Exchange Commission, including TRW's report on Form 8-K filed May 29, 1998. The company undertakes no obligation to update any forward-looking information.