GKN hit hard as car makers cut their outputs
The carmakers’ approach of cutting back output in response to falling demands in the global market has hit automotive components businesses hard. Their move is biting into component makers’ profits and forcing them to lay off members of their workforce.
All 1,400 temporary employees of GKN in the sector will be losing their jobs by the end of 2008 and nearly 75% of over 50 automotive related companies around the globe are planning big cuts in production.
GKN reported strong performance in aerospace business and demand in highway operations for agricultural machinery parts was also quite high, but cautioned that lead indicators for Off highway and civil aerospace were going negative and market demand in 2009 appeared to be softening.
Large numbers of car makers, including those in the UK, have already introduced cuts in production. German car manufacturer, Daimler, was planning to double the production suspension periods for Christmas and New Year at two of its plants, Untertuerkheim and Sindelfingen
GKN employs over 42,000 people globally including 5,000 in the UK, of which 50% are engaged in automotive component manufacturing. However, GKN is going to lay off only a handful of temporary staff in Britain until restructuring.
GKN is predicting a 15% fall in sales of automotive components in the fourth quarter compared to last year. The restructuring for 2009 is being drawn up on assumptions that demand for components will be 8% less than 2008.
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