Timken has announced it is lowering its earnings guidance for the third quarter and the year as a result of a decline in North American automotive demand, manufacturing inefficiencies in the company’s automotive group and higher-than-expected raw materials costs affecting its steel group.
‘Our automotive performance is disappointing, and we are taking additional actions to address it,’ said James W Griffith, president and CEO. ‘As the Big Three auto makers have moved to cut production levels, we have experienced steeper volume declines in our automotive group than we had anticipated.
‘North American passenger car production has been particularly hard hit. This has exacerbated the performance challenges which our automotive plants have experienced in recent months and will further delay the benefits of our restructuring efforts.’
More than 900 positions are expected to be lost during the second half of the year, with about 700 of these in Timken’s automotive business.
Timken’s steel group has also been damaged by the decline in passenger car production rates as well as higher raw material costs. It has raised prices on certain products and reduced spending to mitigate the impact of these negative factors.
‘US manufacturing continues to lag the rest of the economy, with this recovery the slowest on record,’ added Griffith. ‘While economists recently have noted some improvement in the manufacturing sector, we have seen very little evidence of a turnaround in the markets we serve.’