Collins & Aikman To Reorganize Operations
10 February 1999
Collins & Aikman To Reorganize Operations; Strategic Move Will Sharpen Customer Focus, Improve Competitive Posture, Reduce Costs
CHARLOTTE, N.C., Feb. 10 -- Collins & Aikman Corporation
announced today a comprehensive plan designed to reorganize its
business and position the Company for long range success in the dynamic global
automotive interior trim market.
The plan is centered around improving the Company's competitive position
by sharpening its long-standing focus on customers. In addition, the steps
being taken are projected to result by the end of 2001 in annualized pre-tax
cost savings of between $25 million and $30 million. On an after-tax basis
this represents savings of $0.24 to $0.29 per basic common share based on
shares outstanding of 61.9 million.
"This plan represents Collins & Aikman's boldest move yet to serve its
automotive interior trim systems customers. We are building on our tradition
of innovation and quality to create customer-focused operations with the
ability to serve OEMs on a local, regional and international basis," said
Thomas Hannah, CEO of Collins & Aikman.
The plan calls for the creation of two divisions from the Company's global
automotive carpet, acoustics, plastics and accessory mats businesses: North
America Automotive Interior Systems to be headquartered in Detroit, and Europe
Automotive Interior Systems to be headquartered in Germany.
"Our goal is to create a one-stop shop for automotive OEMs, while
achieving significant operational, overhead and productivity efficiencies.
For our interior systems operations, we are moving from multiple operating
groups spanning 12 countries to two highly efficient, cooperative divisions
with shared resources capable of handling global customer demands with
specialized customer-focused teams. Through shared technology and consistent
systems, we are also in the process of seamlessly interfacing marketing,
development, engineering and design," Hannah said. "We have been listening to
our customers and believe that this plan creates some valuable advantages for
them. From individual components to entire interior trim systems, this new
organizational structure will enhance the Company's global customer service."
The Company also announced that, beginning in 1999, it will further
centralize and restructure certain staff functions at its Charlotte, North
Carolina location. While the Company expects the reorganization of the
interior systems operations to be substantially completed late this year,
certain elements of the overall plan are expected to take up to 24 months to
implement fully. The one-time pre-tax costs associated with the plan are
estimated at between $14 million and $18 million, including a restructuring
charge of $4 million to $6 million to be recognized in this year's first
quarter. The plan is projected to turn cash flow positive by the end of 1999.
"Another key benefit of the reorganization is the cost savings that will
arise from streamlined operations and increased efficiency levels. By
combining these operations, we can eliminate the duplication of costs at all
stages of the business and improve our competitive position in the automotive
industry," Hannah said. "With this reorganization, we believe we are creating
an infrastructure capable of not only supporting -- but actually stimulating
-- our growth into the next century."
Approximately 500 employees within Collins & Aikman will be affected by
the plan, some of whom will be offered the opportunity to accept other
positions within the Company.
"Our top priorities as an organization are to serve our customers with the
best possible products and service and to lower our cost-structure for long-
term shareholder value," Hannah said. "Although the changes we will be
implementing in 1999 are challenging, we believe they will provide for Collins
& Aikman's long-term success through improved service and responsiveness,
increased teamwork among our engineering, development and marketing functions
and an expanded presence in Europe."
Dennis Hiller, currently President of the Company's Carpet & Acoustics
Division, has been named President of the newly created North America
Automotive Interior Systems Division. A new building under construction in
Troy, Michigan will house the North American headquarters as well as a state-
of-the-art technical center to focus on specific customers. Complementing the
operations in Troy is the Company's newly expanded Plymouth Technical Center,
which will encompass a number of global customer-focused development,
engineering and design teams.
D. Michael Weston, currently President of C&A Plastics, has been appointed
as President of Europe Automotive Interior Systems. In addition to the
headquarters in Germany, the European Division will offer customers the
convenience of a number of regional technical and engineering centers in
England, Sweden, and Germany.
The Company stated that the global operations of its Dura Convertible
Systems and Automotive Fabrics businesses, which are headed up by presidents
Reed White and Dean Gaskins, respectively, will comprise Collins & Aikman's
Specialty Automotive Products Division.
"The key products of these operations typically are not marketed to our
customers together with our other interior trim offerings," said Hannah.
"Nonetheless, the unparalleled design, engineering, manufacturing, quality,
delivery, product innovation and customer service that have become the
hallmarks of our convertible systems and fabrics businesses will not be
affected by the reorganization."
The Company also announced that it expects to release fourth quarter and
full year 1998 results on February 23.
This press release, other than historical financial information, contains
forward-looking statements that involve a number of risks and uncertainties.
Important factors that could cause actual results to vary materially from
those anticipated in the forward-looking statements are set forth in Collins &
Aikman's Securities and Exchange filings, including, without limitation, in
Items 1 and 7 of the Company's Annual Report on Form 10-K for the fiscal year
ended December 27, 1997 and Item 2 of the Reports on Form 10-Q for the
quarters ended March 28, 1998, June 27, 1998 and September 26, 1998.
Collins & Aikman Corporation is a global supplier of automotive interior
systems, including textile and plastic trim, acoustics and convertible top
systems. The Company employs more than 15,000 employees and operates 65
manufacturing facilities in 12 countries.