BorgWarner Blames Firestone Recall, Euro Drop For Low Earnings

ByBridgeNews Automotive parts maker BorgWarner Inc. said Sept. 12 that a slowdown in production of trucks and sports utility vehicles will drag earnings below Wall Street expectations and force a restructuring of the company. The Chicago-based maker of vehicle powertrain components and systems lowered its earnings outlook for its third quarter and fiscal year, blaming uncertainties surrounding Ford Motor Co.'s production of truck and sports utility vehicles following the Firestone tire recalls, weakness in the euro, and a downturn in sales at DaimlerChrysler and U.S. heavy-duty truck makers. BorgWarner now expects to earn 95 cents a share before restructuring charges in the third quarter, less than the $1.06 analysts were expecting. For the full year, the company sees earnings of $5.30 to $5.50 a share before the charges. Analysts had expected $5.56. BorgWarner also said it was evaluating and integrating certain businesses "to bring costs in line with vehicle production slowdowns in major customer product lines." The company expects the restructuring to save $9 million annually beginning in 2001. CEO John Fiedler said that after years of "unparalleled growth," the industry is facing uncertainty, and that the company is working to bring costs in line with the changing conditions. "Each of our units has identified costs that can be cut," he said. He called Ford the "real wild card" in BorgWarner's problems, saying the automaker is expected to temporarily shut down some plants where its Explorer SUV is produced.