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The eBearing News
October 25, 2005
Dana Looks to Sell Off
Bearing Businesses
copyright © 2005 eBearing Inc.
Dana Corporation (USA; NYSE:
DCN)
forecasting a "significant loss" for fiscal 2005,
announced a series of sweeping, "operational and strategic initiatives to enhance financial performance,"
from divestitures to restructurings to layoffs and benefit cost reductions.
Key among those moves, Dana is planning to sell off three business units: engine hard parts, fluid products,
and pump products.
Included in the engine hard parts group are Dana's Clevite and Glacier Vandervell engine bearing
manufacturing operations.
In all, the engine hard parts group -- including the other piston ring and camshaft manufacturing
operations -- had 2004 sales of approximately USD $720 million.
Engine hard parts currently employs more than 5,300 people in 56 operations across 10 countries.
Optimistically, Dana's Chairman and CEO, Michael Burns, said: "While no longer central to Dana's
future direction, these operations and the people associated with them have great potential for owners
that are more strategically focused on these market segments. We expect to use the proceeds from
these divestitures to reduce debt and reinvest in those businesses that will be key to profitable
growth in the future."
But auto industry analysts point out divestitures are not an easy path.
In fact, with so many distressed automotive suppliers and divisions on the market today, it can
only be considered a buyers market.
In the United States, the marketplace is flooded with available underperforming, high cost, high overhead,
low margin automotive businesses being jettisoned by behemoths such as Delphi down to smaller
suppliers in financial distress from the domino effect fallout of their customers' problems.
So far in 2005, there have been 71 mergers and acquisitions of North American automotive suppliers.
Ford alone will be putting 23 former Visteon facilities on the block, adding to the glut.
Carlyle Group's Greg Ledford described the automotive supplier business market to Automotive
News with the analogy of trying to catch a falling knife: "Would you grab it? There is too much
capacity in the market, and we will continue to see news like the Delphi [bankruptcy] filing."
Merrill-Lynch auto industry analyst John Casesa wrote in a position statement this week, "The domestic
auto industry's structure is not stable, and simply put, we expect it will get worse before it
gets better."
And, analysts note, Dana's divestitures come with strings attached -- notably, the company's revelation
that accounting irregularities will force it to materially restate earnings for 2004 and the first half
of 2005. Assuming those restatements impact the business divisions Dana is trying to sell, the waters
are muddier. A business isn't worth much if the books aren't straight, said one. "Any potential buyer
will be into due diligence like never before; and that can drag out an acquisition for a very long time."
Early estimates of Dana's financial restatements indicate fixing the accounting errors will reduce
2004 and first half 2005 earnings by as much as $45 million.
Mr. Burns explained Dana's vision for its future: "Collectively, these operational actions will
result in a Dana Corporation that is even more focused on its light- and heavy-vehicle drivetrain
products, associated structures, sealing, and thermal products businesses. This refocused product
array will help us better support our global automotive, commercial vehicle, and off-highway
markets and, along with our extensive global footprint and diverse customer base, will contribute
to making Dana increasingly competitive moving forward."
Now designated among its "non-core businesses," the Clevite and Glacier engine bearings do
not fit the "new" Dana's narrower focus.
But the looming prospect of changing owners is nothing new for Clevite and Glacier engine bearing operations.
In fact, eBearing's nonscientific research indicates those engine bearing manufacturing operations
are the most-divested hot-potato manufacturing operations among North American automotive suppliers.
In July 2004, after a year trying, Dana sold off its Automotive Aftermarket Group to The Cypress
Group for $1.1 billion in cash. That divestiture, however,
specifically excluded Dana's Clevite Engine Parts aftermarket bearing distribution and
marketing operations in Ann Arbor, Michigan; Churubusco, Indiana; Collierville, Tennessee; or
Olive Branch, Mississippi.
article: Dana divests aftermarket group, except bearings
Dana acquired Glacier Vandervell Bearings in 1988. It now consists of Glacier Vandervell North
America's two operations
in Ohio and Iowa, along with Glacier Vandervell Europe with six operations in the UK, France,
Italy, Slovakia and another in Brazil. Overall, Glacier Vandervell engine bearing's OEM and aftermarket
operations employ over 3,000 people worldwide.
In 2001, Dana divested Glacier Industrial Bearings -- prelubricated and self-lubricating metal-polymer
plain bearings -- to Goodrich, which later divested it in a spinoff to form EnPro Industries.
Glacier's operations have not been as profitable as expected, however.
article: Glacier Slovakia reports fiscal 2003 loss
Clevite is a brand name now used by Dana's aftermarket engine bearing sales operations, although it
traces back to Clevite Corporation, which became a brand name when it merged with Cleveland Graphite Bronze
Company (formerly Dann Spring Insert Company) in 1952. Forming the historical circle, Vandervell
Products Ltd. got its start in the UK with thinwall bearing manufacturing equipment purchased from
Cleveland Graphite Bronze. CGB later renamed itself Clevite Corp, then became part of Gould, Imperial
Clevite and T&N plc. Federal-Mogul acquired T&N, and with it the Clevite and Glacier bearing operations.
Meanwhile, Vandervell and Glacier had merged in 1988.
Federal-Mogul sold the Glacier Vandervell and Clevite polymer and thinwall bearing operations to Dana
for a total of $430 million; $410 million for Glacier and $20 million for Clevite.
Since 1997, Daido Metal Corporation (Japan) and Glacier have operated the Clevite
brand engine bearing plant in Bellefontaine, Ohio as a joint venture facility, Glacier Daido America.
The plant supplies U.S. domestic auto manufacturers. In 2001, the thinwall plant in
Atlantic, Iowa was added to the venture.
Last month, in a move that should have telegraphed a larger message, Dana and Daido abruptly ended the
entire joint venture arrangement. Dana took full control of the
Glacier Daido America engine bearing plant in Atlantic, Iowa, while Daido took control of the thinwall
bearing and component plant in Bellefontaine, Ohio.
article: Dana and Daido disband U.S. engine bearing joint ventures
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- by Bruce A. Carr
from individual research,
tips and commercial sources.
Unauthorized reproduction is prohibited.
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Entire contents Copyright 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered
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eBearing.com ... for everything that moves™
Entire contents Copyright © 1999-2008, eBearing Inc. All rights reserved.
eBearing.com and "... for everything that moves" are registered trademarks of eBearing Inc.
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