Dana Corporation Chairman Comments on Aftermarket Sale and Cost Saving Opportunities
16 November 2004 - 1:50AM
PR Newswire (US)
Dana Corporation Chairman Comments on Aftermarket Sale and Cost
Saving Opportunities TOLEDO, Ohio, Nov. 15 /PRNewswire-FirstCall/
-- In recent meetings with analysts and investors, Michael J.
Burns, chairman and CEO of Dana Corporation (NYSE:DCN), confirmed
the company's confidence that it will complete the sale of its
automotive aftermarket businesses to an affiliate of The Cypress
Group by the end of November. (LOGO:
http://www.newscom.com/cgi-bin/prnh/19990903/DANA ) Mr. Burns
reiterated Dana's plans to use proceeds from the sale for an
additional contribution of up to $200 million to the company's
pension plans and for further reduction of Dana's debt, both of
which are expected to accelerate the company's return to
investment-grade status. Additionally, over the long term, Dana
will reinvest in its core businesses to improve its cost structure
and strengthen top-line growth. This is expected to be done through
consolidation of its manufacturing base, as well as investments in
joint ventures and selective acquisitions. Mr. Burns also commented
on a series of company actions designed to significantly reduce
costs, including leveraging its global purchasing efforts,
accelerating the deployment of lean manufacturing techniques,
extending its value engineering efforts, and standardizing
administrative processes. Purchasing Consolidation Paul Miller,
Dana's new vice president of purchasing, is accelerating the
consolidation of the company's purchasing activities, which were
widely dispersed and operated on a number of different IT systems.
Dana's cost of direct and indirect materials and purchased services
totals more than $4.5 billion annually. By fully leveraging its
purchasing power, Dana hopes to realize a significant reduction in
these costs over the next several years, but cannot project the
actual cost savings at this time, as the full impact of this
initiative is still being assessed. Mr. Burns commented that this
initiative has proven timely, as it has helped to partly offset the
higher cost of steel and other commodities that Dana has faced this
year and expects to face in 2005. Incremental steel costs in the
third quarter of 2004 impacted the company's continuing operations
by approximately $40 million before tax. Mr. Burns expressed hopes
that steel cost increases will subside in 2005, but reiterated that
the company is taking a conservative approach in planning for next
year. Lean Manufacturing Another significant opportunity for cost
savings is lean manufacturing techniques, including value stream
mapping and commonizing on best processes globally. Value stream
maps graphically chart manufacturing and other business processes
to enable the company to identify and eliminate non-value- added
activity. Dana has recently adopted a standardized approach to
value stream mapping. The company has mapped 39 processes to date,
and the results are encouraging. This technique could be applied to
hundreds of processes across the company. If the initial results
are indicative, Dana could potentially achieve substantial savings
in the long term. However, at this early stage, no firm estimate of
savings can be made. Value Engineering Value analysis/value
engineering (VA/VE) represents an additional opportunity for
savings. VA/VE is a process done in conjunction with customers to
redesign components to reduce costs. Mr. Burns commented that the
benefits of VA/VE can translate not only into cost savings, but
also into top-line growth. Standardized Administrative Processes
Mr. Burns also indicated that Dana is working aggressively to
standardize administrative processes in areas such as information
technology, finance, and human resources. He added that, like
purchasing, these processes have been operating in a very
decentralized environment, and standardization will not only reduce
cost, but also improve effectiveness. Conclusion Mr. Burns
reiterated that the sale of the automotive aftermarket businesses
is an important strategic step for Dana. In the near term, the
company will realize the benefits of lower pension and interest
expense. In addition, while no plans or cost saving estimates have
been finalized, Dana is studying ways to enhance its manufacturing
footprint through consolidation, joint ventures, and selective
acquisitions. This will enable Dana to better serve its global
customers and further improve its cost structure in the longer
term. Mr. Burns concluded that these efforts, coupled with the
ongoing cost saving initiatives, will better position Dana for the
future. Dana Corporation is a global leader in the design,
engineering, and manufacture of value-added products and systems
for automotive, commercial, and off-highway vehicles. Delivering on
a century of innovation, the company's continuing operations employ
approximately 45,000 people worldwide dedicated to advancing the
science of mobility. Founded in 1904 and based in Toledo, Ohio,
Dana operates technology, manufacturing, and customer-service
facilities in 30 countries. Sales from continuing operations
totaled $7.9 billion in 2003. Dana's Internet address is
http://www.dana.com/ . Forward-Looking Statements Certain
statements contained in this release constitute "forward-looking"
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements represent Dana's expectations
based on our current information and assumptions. Forward-looking
statements are inherently subject to risks and uncertainties.
Dana's actual results could differ materially from those that are
anticipated or projected due to a number of factors. These factors
include the success and timing of the sale of the automotive
aftermarket businesses; the extent and success of our cost
reduction, lean manufacturing, VA/VE, and cash management programs;
increases in commodity costs, including steel, that cannot be
recouped in product pricing; competitive pressures on our sales and
pricing; the ability of our customers and suppliers to achieve
their projected sales and production levels; and other factors set
out in our public filings with the Securities and Exchange
Commission. Dana does not undertake to update any forward- looking
statements in this release. Photo:
http://www.newscom.com/cgi-bin/prnh/19990903/DANA AP Archive:
http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com
DATASOURCE: Dana Corporation CONTACT: Michelle Hards of Dana
Corporation, +1-419-535-4636, or Web site: http://www.dana.com/
Company News On-Call: http://www.prnewswire.com/comp/226839.html
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