TRW to Trim Plants, Jobs to Boost Automotive Unit

TRW Inc. said Wednesday it will close more than a dozen plants and cut 7,500 jobs worldwide in a bid to reduce costs and become more competitive in the automotive parts business.

The Cleveland-based maker of products for the automotive, space and defense industries--one of its major customers is General Motors Corp.--said it hopes to cut $75 million in costs and reduce capital spending by $300 million over five years.

TRW, whose most recent earnings were hurt by the strike at GM, will take pretax charges of $125 million to $150 million over the next 18 months, of which about $25 million will be incurred during the rest of this year.

The company said that 10% to 15% of its 137 manufacturing plants in 24 countries will be closed, while the job cuts will reduce its work force of 54,000 in the automotive businesses by 14%.

It also plans to cut its number of suppliers in half and reduce manufacturing costs by 25%.

“We are taking these actions to enhance . . . profitability in our automotive business,” Chairman Joseph Gorman said in a statement.

TRW said it has not decided which plants will be closed and when, but expects layoffs in the U.S. and overseas. President Peter Hellman said the decisions will be made over the next 18 months and carried out by 2000.

As for capital spending, the cuts will come out of the automotive sector, which accounts for $400 million to $450 million of TRW’s annual expenditures of $550 million to $600 million.

The company’s announcement, which came the day after the GM strike was settled, had little impact on its stock, which added 38 cents to close at $54.88 on the New York Stock Exchange.

Brian Eisenbarth, an analyst at Collins & Co., said the plan is a step in the right direction, but he couldn’t say if it will be enough.

He noted that all auto parts makers have been under intense price pressure and that their ranks have swelled but the number of big clients--Detroit’s Big Three auto makers--remains unchanged.

Gorman described the measure as “aggressive and not easy to produce.” But, he said, “they will be sufficient to enable us to produce superior results.”