Auto Parts Maker SPX to Cut Jobs, Shut Offices

Auto parts maker SPX Corp. said Monday it will cut 1,000 jobs, or 7% of its work force, and close 25 of the offices it acquired with the recent $2-billion purchase of General Signal Corp.

SPX said the closures will be made over the next six months and will result in a restructuring charge of $210 million to $250 million in the fourth quarter.

Muskegon, Mich.-based SPX, which makes diagnostic tools for autos and some auto parts, is cutting costs and expanding into other businesses, such as General Signal’s motors for kitchen, exercise and lawn equipment.

While SPX won’t specify the closing locations until next month, some of them could occur overseas, said SPX spokeswoman Tina Betlejewski. She wouldn’t say whether SPX will drop any of the General Signal product lines.

The closure of the former General Signal headquarters in Stamford, Conn., which employed fewer than 200 people, is nearly complete, she said.

The fourth-quarter charge could rise as the company reviews asset valuations, in-process technology and potential environmental costs arising from the acquisition, SPX said. It expects to incur another $20 million in related costs next year.

Analysts were expecting SPX to earn $1.04 a share in the fourth quarter, up from 83 cents a year ago, according to First Call Corp. SPX said it still expects to report 1999 earnings of $4.85 a share before charges, compared with $3.95 in 1998.

Profits at SPX and other parts makers are under pressure as auto makers demand lower prices. Auto makers also are looking for suppliers who can build bigger chunks of vehicles, instead of just separate parts, to save money in assembly.

These forces have led to a wave of acquisitions and unit sales this year as parts makers looked for the combination that works best for their product lines.

The news boosted SPX shares by $3.13 to close at $66.19 on the NYSE.