Donnelly Launches European Turnaround Plan
3 March 1999
Donnelly Launches European Turnaround Plan
HOLLAND, Mich., March 3 -- Donnelly Corporation
said today that the company has begun communicating with its European
employees on a broad plan to turn around several of the company's key European
operations.
The move has been expected for some time. Early last fall, Donnelly sent
an experienced team of senior U.S. managers to take control of its European
operations and develop a turnaround plan that would restore the European unit
to long-term profitability.
The European management team completed the broad development of its work
in early February, and the Donnelly Corporation Board of Directors approved
the turnaround plan at its regularly scheduled meeting February 12, 1999.
Among the key initiatives contained in the plan are:
* The elimination of approximately 150-200 production and overhead
positions during the next 12-18 months.
* The consolidation of two major German production facilities into one
location.
* The immediate re-negotiation of existing labor contracts to slow the
rate of growth in labor costs and obtain more flexible work rules and
practices.
* The accelerated implementation throughout Europe of the Donnelly
Production System (DPS), Donnelly's unique approach to lean
manufacturing processes.
The areas most impacted by the turnaround will be European corporate staff
and automotive mirror manufacturing operations in Ireland and Germany.
As part of the turnaround package, Donnelly's Board of Directors approved
a one-time, pre-tax charge of $8.6 million to cover the costs of implementing
the plan. That charge, however, is not expected to have a significant impact
on Donnelly's fiscal 1999 third-quarter performance because it will be largely
offset by other one-time gains, primarily from the sale of Donnelly's equity
in VISION Group plc., of Edinburgh, Scotland.
"We are taking the right steps to bring our European operations up to
acceptable levels of performance," said Dwane Baumgardner, Donnelly's chairman
and chief executive officer. "Everyone in our organization knows that we have
a long and difficult challenge before us; we know it will take time. But we
are confident that we will be successful because we have the resources and the
people in place to make the turn in Europe and deliver the financial results
that match the huge potential we have already found in our customer and
product base."
Donnelly has approximately 2,400 employees in Europe, and manufactures
automotive products in seven locations in four countries.
Donnelly Corporation is an international automotive supplier dedicated to
serving customers around the globe with industry-leading components and
systems in automotive mirrors, windows, door handles and interior trim and
lighting. Through its various product lines, Donnelly is a supplier to every
major automotive manufacturer in the world. The company has been based in
Holland, Michigan, since 1905, and today has approximately 5,500 employees in
14 countries worldwide. In addition, Donnelly is nationally recognized as a
leader in the application of participative management principles and systems.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Investors are
cautioned that any current expectations of the Company, or its management, are
not guarantees of future performance and involve risk and uncertainties.
Actual results may differ materially from those in forward-looking statements
as a result of various factors including, but not limited to (a) whether the
Company is able to successfully implement the European turnaround plan; (b)
general economic and currency conditions in the markets in which the Company
operates; (c) fluctuation in worldwide or regional automobile and light truck
production; (d) changes in practices and/or policies of the Company's
significant customers; and (e) other risks and uncertainties.