Dana (NYSE:DCN)
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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
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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