Article published February 03, 2009
Dana fights to distance itself from bankruptcy
Despite financial woes, company is optimistic
By LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER
A year after emerging from the shelter of bankruptcy protection, Dana Holding Corp. is spending its first birthday trying to figure out a way to get to its second.
The Toledo auto parts manufacturer has cut 6,000 jobs, closed four factories, and undergone an executive shuffle since emerging from 23 months of Chapter 11 bankruptcy protection on Jan. 31, 2008. Meanwhile, its common stock - passed out to creditors of the former Dana Corp. at an expected value of about $22 a share - closed Feb. 4, 2008, at $12.75 a share and never got higher. It closed Monday at 84 cents, a decline of 93 percent. Still, executives said the local firm is headed in the right direction.
"Our reorganization and exit financing positioned us to compete in a very challenging market," company spokesman Chuck Hartlage said.
"We have a strong balance sheet, strong liquidity, infusion of talent at the board and executive leadership levels, and a strong new operating system to continue strengthening how we manage and measure our operations."
Dana, which makes axles and other parts for cars and trucks, has about 29,000 employees worldwide, including about 1,000 in metro Toledo. The company is expected to post sales for 2008 of $8.2 billion, down from the $9.2 billion in 2007 that placed it No. 283 on the Fortune 500 list.
Dana's senior management has been working to increase productivity at its manufacturing facilities. Gary Convis, a retired Toyota Motor Corp. executive who was named Dana's chief executive officer in April, stepped aside last fall to focus on introducing Toyota's lean manufacturing system at Dana's factories.Despite the upheavals, Dana's survival depends on being able to deliver goods to customers who themselves are having their worst year in decades.
"It's mostly about numbers and deliverables," said Aaron Bragman, an auto analyst with Global Insight's Automotive Group in suburban Detroit. "If you can meet the numbers and meet the targets and still survive, that's really going to be the biggest challenge for Dana."
The company has said it intends to apply for a share of $25 billion in federal funds available to help auto companies retool their factories to make more fuel-efficient vehicles.
Mr. Bragman said he believes Dana may survive the economic tsunami that continues to devastate the automotive industry, but not without overcoming several obstacles.
"There is going to be a market for what Dana is selling, but it's going to be a reduced market for a couple of years," he said of Dana's future.
"I don't think anybody is in better shape when they're in bankruptcy, but a large number of companies do re-enter bankruptcy within five years, and that's a risk for Dana as well."
Contact Larry P. Vellequette at:
lvellequette@theblade.com
or 419-724-6091.
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