Meritor, a leading global supplier of drivetrain, mobility, braking and aftermarket solutions for commercial vehicle and industrial markets, announced that it will close its European trailer axle business on July 31, 2011. The company currently estimates that charges in the range of $17 million to $23 million will be incurred over the next year in connection with these actions. Of these charges, an estimated $12 million to $18 million are expected to result in cash expenditures.
“This decision is driven by the competitive nature of the European trailer axle market which requires significant scale to address increasing cost challenges,” said Joe Mejaly, president, Aftermarket and Trailers, Meritor. “In addition, following the decline in recent years, the market for commercial vehicle trailers is recovering more slowly than other sectors.
After an extensive review process, we have concluded that we will be unable to achieve acceptable financial returns on a sustainable basis and that future investment would be better deployed to other businesses,” said Mejaly. “We recognize the impact of this decision on our workforce,” said Mejaly. “Our employees are talented and highly skilled individuals who have worked hard to support our customers. We will do our utmost to assist them during this transition.” In total, 171 employees are affected by this action. In addition to the company’s main trailer axle manufacturing operation in Cwmbran, United Kingdom, Meritor also has trailer employees located in France, Italy and Spain.
“We are appreciative of the long-term relationships we have maintained with our customers in the European trailer business and are taking steps to mitigate the challenges this action may present,” said Mejaly. The company also remains committed to customer service through its global Aftermarket business. Service parts will continue to be available and warranties will be honored.
The company’s facility in Cwmbran, United Kingdom, is also home to Meritor’s center of expertise for the design, development and manufacture of braking systems and components for the commercial vehicle truck market. In September 2010, the company announced its intent to invest $42 million to advance its foundation brake leadership position in Europe. The brake business in Cwmbran is entirely unaffected by the closure of the European trailer axle business. Meritor’s trailer axle manufacturing operations in North and South America, including the company’s Suspensys joint venture in South America with the Randon S/A group, are also unaffected by this action.
In addition, Peter Loimaranta, General Manager of Colrain – Meritor’s exclusive trailer equipment distributor in Australia – commented, “Meritor’s European announcement has no impact on the Australian market. Meritor’s Australian trailer equipment will remain unchanged in terms of design, range, quality, supply and distribution and the recently launched disc brake version of its CS axle and suspension range demonstrates the commitment of both Meritor and Colrain to the Australian market.”
With more than a 100-year legacy of providing innovative products that offer superior performance, efficiency and reliability, Meritor serves commercial truck, trailer, off-highway, defense, specialty and aftermarket customers in more than 70 countries. Meritor is based in Troy, Mich., United States, and is made up of more than 11,000 diverse employees who apply their knowledge and skills in manufacturing facilities, engineering centers, joint ventures, distribution centers and global offices in 19 countries.